excerpt from Cobra's blog VIX:VXV ratio hit a record low today which to me means not much upside room ahead. Normally when the market rises, you want to see VIX rises as well, because it means people are cautious and therefore bought lots of put to protect their longs, so a pullback, if any, won’t drop much. Now the market rises while VIX keeps dropping which means not many people are buying put to hedge, this is a dangerous situation because once the pullback starts, there’s not much buffer below so the pullback will be sharp and violent. lh5.ggpht.com/_APmrYvpA45s/TRKN3IiC2iI/AAAAAAAAJiw/EfdDnBsHsXg/s1600-h/VIXtoVXVRatio%5B2%5D.png
Believe you are correct in your observation. Little doubt in my mind we may see a "shaky" correction in January. Moot for a little rally late in the month. Depending on the news and events to come, would not be too surprised if we correct 30-40% off the uptrend which began last July 7.
Economic cycles dictate that sooner or later China will feel the crunch. Believe the bloom has fallen from the sage for small cap ADRs. May be a few small cap ADR's that can ride out the gathering storm... but there will be casualties. Will take quick profits from my remaining holding as they may occur. I'm just a back up here, but thanks. If SI remains like the MSN board, the only problem may will be a drop in troll with a spam post. It happened now and then, so could occasionally one could pop up here. We will purge the trolls and any such tripe.
I actually think tomorrow (12/31) will be up -- no good reason. I think there will be some celebratory buying over the fact that the market had a much better year than anyone would have anticipated this time last year. Then too, there are folks on the sidelines who are beginning to rue that they have missed it (again!). At the same time, it's the last day for end-of-year tax selling, and the mutual funds will be doing some final window dressing. Both of those factors are not fundamentally sound reasons for market movement and so can lead to distorted valuations. Broadening of market participation is not usually a good thing -- it is often the little uninformed guy buying in at the high. Tomorrow and the first few days of next year might actually be a good time to take some profits. I have one stock that jumped mightily today (BDSI, up 15%). You can bet I'll be watching it closely tomorrow for follow through. Little stocks like this often run for several days since the first big day garners interest where there had never been any before, but if the follow-through isn't forthcoming, I'll probably sell it and wait a bit before re-buying. My original target was 4.95 (closed today at only 3.7) and I still calculate that to be about fair value. But I expected it to slowly rise to that number, not take it in 4 big bites (which if it repeats today's performance a few times would just about do it).
Last Edit: Dec 30, 2010 20:14:09 GMT -5 by yclept - Back to Top
Well, it wasn't as I hoped. We were actually down today based on the broader indices -- my port was also down a little, primarily because the BDSI I mentioned above retraced about half of yesterday's gain and TBT whacked me a bit as did DGZ. The BDSI fell immediately out of the gate. Come Monday we might get a feeling for which direction this market is pressured to go. I don't think the last two weeks count for much in determining market forces.
entertainment only! bearish 0 line cross [a href="http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808&cmd=show[s181107814]&disp=P"]http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808&cmd=show[s181107814]&disp=P[/a] at least 2 of the 4 advisors i read are bullish for tomorrow's trading
"Friday’s Jobs Report: No Downside Surprise Likely By Rennie on Thursday, January 6th, 2011 at 2:51 pm .The S&P500 briefly ran up to a new intraday high this morning at 1278.17 before selling off. Historically, when the S&P touches a 40-day high on the day prior to the Employment Report release, the market has a strong track record of NOT posting a significant selloff on the day of the release. Over the last 30 occurrences stretching back to 1995, not a single instance coincided with a 1% down day for the S&P500, and only 2 out of 30 involved more than a 0.5% drop."
Last Edit: Jan 7, 2011 5:12:44 GMT -5 by majeasy - Back to Top
What would be the effect of gradually rising interest rates later in 2011 and beyond have on stock market prices, gold, REITs. and Treasuries. It may be a good idea to plan for some investments moves should this began to take place. Any strategy ideas, suggestions, etc., that may help us all to weather a possible rising storm on the horizon (assuming the economy will continue to gradually grow throughout the next few years. How do you plan to prepare?
Mod, That's why some of us own TBT (short treasury bonds): interest rates up, bonds down! The earliest moves by the FED won't be as transparent and vocal as a rise in the prime rate, but rather will consist of them selling the bonds they bought as part of the "quantitative easing" supports which they can do without a lot of fanfare if they so chose. They announced QE far and wide to bolster morale in the economy; I suspect reversal of the actions will be as quiet as a cat burglar. Other FED support money has already exited the economy, by which I mean the TARP funds that have been paid back -- I'm too lazy to try to look up the numbers, but my guess would be the latest round of QE probably didn't do much more than offset the returned TARP money. I think we're seeing the market already starting on the road to tightening, mortgage rates, for example, are higher than they were about a month ago. I'm pretty sure I read that at one of the latest treasury auctions the bills sold for a lower price than had been prevalent (thus indicating a higher interest rate return for the buyers). The stock market and economy can thrive in a slightly inflationary environment with low (albeit slowly rising) interest rates. Bond prices should go lower as they are directly affected by interest rates and don't have the offsetting cushion of higher profits, increased sales, etc. that can bolster stocks. One of the things to watch with stocks will be lower efficiencies in companies as they hire new employees with all the attendant training and error issues.
Do you think the REITs with good dividend payouts currently be adversly affected by rising interest rates? They probably could continue to do fine with only a slight rise, but if the Fed really decides to slap on the breaks, those dividend rates may come tumbling down in lock step. I would want to bail out of my REITs... Probably a bit early yet though. What warning sign would you use to clean the port of a REIT? Those divis sure a nice thing for now, so do not want to bail too soon.