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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 681.43+1.6%Nov 10 4:00 PM EST
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To: HairBall who wrote (18710)6/28/1999 9:06:00 PM
From: pater tenebrarum  Read Replies (1) of 99985
 
LG, <<stockycd: Do you think this is a bull trap?>>, as Haim has pointed out over on the Kahuna thread, the put/call ratios say it is.
they spell complacency, as does the VIX. sometimes this changes as a rally progresses and is met with disbelief; however, i doubt this will be the case this time around. the 'summer rally' conditioning is so ingrained, that conviction far outweighs disbelief at this stage imo. note also that there is anecdotal evidence of wall street strategists looking forward to the post-rate-hike scenario with optimism. the expectation of strong earnings is frequently cited to lend support to this optimism (Peter Canelo of MWD is an example, but he is not the only one.Mike Holland expressed a similar view today, and the general tone of interviewees on CNBC is along those lines). no-one even mentions the market's extreme overvaluation, so we should remain wary and cautious. if there were a lot of worrying about the market's unsustainable levels and predictions of an imminent correction discernible, rallies would be more deserving of the benefit of doubt. the same analysts that were calling for a correction following the jan.-march consolidation are calling for higher prices now. it happens at times that the market continues to trend sideways when bullish sentiment is high and starts to rally when it has sufficiently decreased. but rallies with the CBOE total ratio at 0,42 are rare and usually short-lived.

regards,

hb
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