what makes you think there will be a large squeeze?
I have 5 or 6 things that I can put on the side of the ledger for a rise here and 2 or 3 for a decline. Of the ones on the rally side, the most important one I see is that sizeable divergence in s-t sentiment. Bearishness is ticking up while the market is holding lofty levels. Some of the measures I follow are back to early-mid November levels -- 85 S&P points below where we are now. That's a big divergence.
An example... I have begun to more rigorously track some data points since October. One of them is the OEX PutVolume/CallVolume. This OEX p/c measure is volatile, but 10/20 day moving averages have been climbing pretty hard since the December top. We have not declined very far from that top, but tons of puts are being moved. Not bullish that. Hell, we've had 4 or 5 days since the end of December where this p/c is over 2! That's people betting short with their money, not their opinion. (And yes, I have read Swenlin's take on these high readings -- he says smart money is buying in prep for a decline.)
Again, I would mention that I would be the first to say that survey ratios are way too optimistic, but that won't affect much what the market can do for a week or two.
Nothing has yet happened. We have to pop for this to work. Given my current position, flat, I will only lose a little pride, and not very much of that, if we decline from here. |
