>>PS Yes, they are 1/8th and I will try to pick up another 100 more today.
Hi Bill,
You have complicated my attempts to read the sentiment indicators:)
With all these puts that you are buying--which obviously must be reflected in the EPC ratio--I don't know how much weight to place on the EPC ratio for yesterday, which shows some of the bearish sentiment in a while:)
Seriously though, as I read some of the more bearish postings on this thread, the thing that comes across is that there is a tendency to use indicators in a manner that most suits one's predisposition in the first place. Let me offer you an indicator that would suggest just the opposite: when one has a sharp move in one direction, with strong momentum, unless it is a blow off, prices almost invariably trend in the direction of the move, after a period of consolidation. The recent rally was very powerful--the market is very overbought and there are no marked divergences--and I would suggest that after a consolidation, which may well be complete for all I know, the market will move up. The divergences that will then appear will suggest a possible top.
Am I nervous about this market? Absolutely--but then I have been nervous about this market for the past 2000 DOW points. The sentiment indicators bother me--as does the valuation. But to compare today's market with that of 1987 seems rather inappropriate, given that the bonds were falling out of bed about two months before the crash, the dollar was very weak, earnings were not anywhere near as good, and the inflation picture is better today.
Believe me, I am not a raging bull--I tend to be a systems trader and use a very mechanical approach in deciding which direction I am trading --takes the emotion out of it. I also use stops, just in case I am wrong. But given the rampant bearishness that is apparent on this thread--not surprising given the name of the thread--I wanted to offer another perspective.
Take care |
