aedens wrote:The other possibility is that bullishness and inflation fears have reached their maximum point. These comments and the comments I quoted from Biggs could indicate the market may have reached its apex or is very close.
Higgenbotham Posts: 338
Joined: Wed Sep 24, 2008 10:28 pm
I don't really want to predict a high, but if someone forced me to I would guess that yesterday was the end of the bear market rally. The options speculation on this run has been amazing to behold. The past few days I have witnessed what seems to amount to record call buying in the early morning ISEE figures and it's been persistent for several days running. They don't keep long term records of early morning readings so I can't say this for a fact, but I've never seen anything like it. However, here is an article where someone who probably does know better is quoted to the same effect:
http://dailyreckoning.com/peak-march-wh ... indicator/
My interpretation is that the public does not want to buy stocks at this point, but they are willing to gamble on call options (which are basically lottery tickets that pay off if prices rise) because they cannot lose more than the pittance that the options cost. In other words, the current stock market has become more like a lottery than a casino. Remember my comment that the stock market has turned from a casino into a carnival. That is exactly what has happened.
Citing a completely different collection of financial market tealeaves, Shartsis relates, “An important measure of option speculation is now in deep space. If one takes the number of bullish option transactions (buy calls, sell puts) and compares the total to that of bearish option trades (buy puts, sell calls), the results reflect the highest level of option trader bullishness in years, perhaps ever recorded. Note that the current level is far beyond what was seen at the Grand Top in 2007,” Shartsis continues. “Hard to believe. This is only one indicator, but an important one I think, and it suggests a severe whipping of the bulls is coming soon.”