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Strategies & Market Trends : Classic TA Workplace

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To: skinowski who wrote (127138)	12/15/2005 9:37:51 PM
From: Win-Lose-Draw	Read Replies (1) of 209892

Generally, all the ingredients for a top seem to be in place. It's hard to argue against this, other than pointing out that breakouts from longterm ranges often look like "tops" right before they look like "successful breakouts". Taking a shot at the long side from here (with usual caveats about risk control) is a classic low-probability, high-expectancy trade that speculators seem to hate. Short version: yes, it looks toppy, but I'm placing a bet on upside anyway. Did you see the P/C? Wow! You should expect to see lower P/C when volatility is low because it takes a lot less P to cover a whole lot more C (or other long) because the low volty allows the P to be taken at closer-in (ie more effective) strikes. Similar CPC levels... EoY '96, Dow rallied ~30% over next 12 months. EoY '97, Dow rallied ~20% by next summer. Late '98, Dow rallied like a MoFu, putting in the ATH over 11k. There are examples going the other way as well, of course.

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