Tuesday, March 9, 2010

Very Close to A Top

There are signs of froth and impending doom. 
  • The ES is stuck at very strong resistance around 1140 despite Nasdaq and Russell 2000 outperformance.  
  • Russell 2000 and Nasdaq outperformance usually occurs late in a rally.  Remember October 2007, the Nasdaq strongly outperformed the S&P up to the top that month.  
  • The divergence of the equity and index put/call ratios.  The equity options is usually traded by retail and speculators while the index options is mostly traded by hedge funds and smarter money.  Equity p/c ratios are low, index p/c ratios are very high this week.  
  • Crude oil and gold lagging the equity indices.  

4 comments:

Anonymous said...

I hope your right! I am not getting a feel for the markets direction at all.
(if) the markets do not turn lower. Are you dumping your short? What is a good level to look for either way?

Market Owl said...

I am in no rush to close my short. I think we should go down to 1121 to fill the gap, and we may oscillate between 1120 and 1140 till options expiration and then I will be looking for a steady downtrend throughout late March to late April.

Anonymous said...

I hope you are right dawg shorts have been abused by the market for seems like a week now

Anonymous said...

How does it feel to be poorer though. This sucks