Thanks, HF. I do have an occasional bright moment... ;)
NDX is entering an area where it topped in Dec 2001 - Jan 2002 (1710 - 1735). That may present resistance. Also, the trendline connecting the Jan and Dec 2004 tops projects towards `~1720.
Sentiment is very bullish, except for one important item - the COT, as related to the "large" contract - where commercials are still relatively long. Otoh, the "mini" contracts on the DOW, SPX and the NAZ all seem to be by now bearishly positioned. There is some controversy as to their relative significance, since the volumes - and the dollar amounts - committed to the large contracts have been shrinking, while those of the mini contracts have been growing. So, the bottom line is that the COT is mixed, but the benefit of the doubt for the time being remains with the bulls.
But the decisive indicator is the price action itself. The markets will have to confuse most players, and one way they might do so, is by... breaking soon, during the "bullish" period, when no one expects. As a matter of fact, I don't know WHY no one expects that to happen -- after all, markets broke down into extended periods of weakness in early 2004 - AND early 2005. And yet, everyone seems confident about the "seasonal strength". This shows what people WANT to believe.
Bottom line -- I added to my small but growing collection of late 2006 - early 2008 puts.... and if and when the markets will show signs of breaking down, I'll take that seriously.
In the wiggles, the rally doesn't look finished, that's true... but if the current decline is indeed wave 4, it may all - potentially - play itself out in a matter of days. |
