Reid,
I also found that article interesting. To the extent that people buy that last paragraph hook line and sinker, that just makes the setup all that much more effective. I found it ironic that the last paragraph could very possibly be shattered into a million pieces by the ramifications of all the paragraphs preceding. It may just be the AMT which is the spark that ignites the blaze that burns down the bull barn.
Spikes this week in the VIX and the Consensus Bullish sentiment indicator (which has fallen steadily from 37% on 11/3 to 25% on 12/15) both suggest that we are at a short-term bottom here. But the 21 day moving average of the CBOE Equity put/call ratio has pulled back a bit from .66 on 12/15 to .64 now, indicating a marked lack of investor fear---despite 7 straight down days in the $COMPX, which saw that index lose over 20% in a little over a week. This is definitely insufficient by historic standards to coincide with a true bottom and reversal point, IMHO. And on Wednesday, a bloody day in the markets, the composite put/call ratio from all five exchanges only reached 0.57, a fairly low reading. This demonstrates a marked discordance of investor sentiment with market realities, IMHO, and thus implies that this correction is far from over, and will not be over until investor sentiment has swung to the opposite extreme.
These indicators continue to imply that, while a short-term bottom is in place and a rally likely here, the bottom has not been reached, and likely won't be until this rally fails. I anticipate that this failure will not be subtle. But also, continued investor fearlessness and/or complacency, and the ease with which momentary fear spikes are quickly shrugged off and the bulls take charge again, suggests to me that the bottoming process will be a long, painful war of attrition---after a sudden sharp initial plunge, and characterized by further bull trap rallies until the last of the bulls is shaken to his core. Only then will capitulation be complete, and the stage then set for true reversal and the next solid bull run.
But for now, it's Christmas, and so I suppose the thing to do is to enjoy the green of both the Christmas tree and the stock charts. Neither will last forever, you can be sure.
As always, JMVHO...........YMMV
T |
