Australian (ASX) Stock Market Forum

Imminent and severe market correction

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sassa said:
Tonight on Bloombergs:
"Option traders buying of puts now exceeds buying of calls."
This is a fair indication that the Dow has reached its peak.
Click to expand...

That would probably be better stated trading in puts now exceeds trading in calls" due to the fact that for every buyer there is a seller.

And we don't know whether the big money is long or short those puts. Even if the big money is long, we also don't know if these puts have been coupled with long stock turning them into synthetic calls (bullish) as Andy has mentioned.

That's not to say the market won't come tumbling down as I have seen that happen in the past when put trading exceeds call trading at market highs but, equally, I have found it to have no effect at all on a bearish outcome. IMHO, it isn't a very reliable indicator for the above reasons!
 
sassa said:
Tonight on Bloombergs:
"Option traders buying of puts now exceeds buying of calls."
This is a fair indication that the Dow has reached its peak.
Click to expand...

Pain and loss or the fear of such is highly subjective and individualised. The same goes for whether we view something as cheap or overpriced. On looking back at the crash of 1987 even though it dropped within days as apposed to the usual slide over months scenario, the Dow in fact only lost a year of gains. It then remained tightly contracted in 1988 and was back around its 1987 highs by the end of 1989. If you weren't too terribly distracted by the crash, 1988 saw building societies offering 17% return on 6 month deposits.

Anyone that was in the market prior to the crash of 1987 will tell you they were making such excellent gains, they were happily funding their spending sprees.

So what you say? Taking some money off the table or locking in profits along the way for enjoyment is fine. It doesn't have to be an all or nothing thing. BTW, I learned that by watching my parents who have traded the stockmarket for over 40 years.

Cheers
Happytrader
 
i am terribly confused by the bloomberg articles because they talk about a drop in the index over a period of time (i.e. six months) rather something that is imminent and severe. anyone have thoughts on this!

also, are people more cautious given the recent correction? what was happening to the S&P or the DJIA before july 2001 when the market dropped 34%. i.e is the comparison with 2001 misleading if the psychological situation is different?

are people more educated about options these days and the protection it offers in terms of protecting profits? i.e. is this divergence because people know more or are more cautious or wary? :eek:
 
nikki said:
also, are people more cautious given the recent correction?know more or are more cautious or wary? :eek:
Click to expand...

Many jumped during the recent sharp decline in indices and are still recovering.
angry-smiley-045.gif
With an increasing number of market participants due to the bull run excitement (prolly the U stock fever) experience arrived in the form of personal fear of loss.

So yes , many are cautious of the low to mid caps and the current borrowing drama but the bargain hunters did very well out of it.
 
LONDON (CNNMoney.com) --" U.S. stock futures rose Thursday as traders shook off profit worries and aimed to restart the record-setting rally."
What better news could you have for the markets.
 
how about record number of foreclosures in september.:D

i get annoyed at how these news agencies (yahoo especially) try and give meaning to simple pofit-taking. yesterday's DJIA performance was strange given that only a couple of companies had reported.

is this intense rally meaningful to someone in terms of elliot wave or some other theory that might predict a potential downturn.

i am getting really concerned at how all the markets are peaking so strongly???? noticed the indian market putting on 4.98% in one day?????? what is going on.:confused:
 
nikki said:
how about record number of foreclosures in september.:D

i get annoyed at how these news agencies (yahoo especially) try and give meaning to simple pofit-taking. yesterday's DJIA performance was strange given that only a couple of companies had reported.

is this intense rally meaningful to someone in terms of elliot wave or some other theory that might predict a potential downturn.

i am getting really concerned at how all the markets are peaking so strongly???? noticed the indian market putting on 4.98% in one day?????? what is going on.:confused:
Click to expand...

What's going on?

Buying is going on, follow it until it changes..... really it's that simple
 
nikki said:
how about record number of foreclosures in september.:D

i get annoyed at how these news agencies (yahoo especially) try and give meaning to simple pofit-taking. yesterday's DJIA performance was strange given that only a couple of companies had reported.

is this intense rally meaningful to someone in terms of elliot wave or some other theory that might predict a potential downturn.

i am getting really concerned at how all the markets are peaking so strongly???? noticed the indian market putting on 4.98% in one day?????? what is going on.:confused:
Click to expand...

All time highs trigger a caution meme in many share market participants.The fear meme kicks in and the risk averse (and shorters) begin the cycle of correction.Any differing observations?
 
The market indicators for the Nasdaq and Dow tonight are rising at such an incredible rate that there will triple digit gains in the high hundreds or over 200.
 
wayneL said:
Bob Pissant-i explains it away. http://www.cnbc.com/id/21253749

IMNSHO, while riding this bull, folks recognize that things ain't so freakin' rosy and are feeling a bit flighty.
Click to expand...
There's been numerous opportunites the past few weeks to cash in. This seems pretty minor. Perhaps the perception that they were coming up to a correction was enough.... The rise in the DJI/XAO has surprised everyone by my reading, even my last taxi driver. And that was in Cuzco! :eek:
 
wayneL said:
Bob Pissant-i explains it away. http://www.cnbc.com/id/21253749

IMNSHO, while riding this bull, folks recognize that things ain't so freakin' rosy and are feeling a bit flighty.
Click to expand...

Big rejection of higher prices on the Dow.I was watching it reverse sharply as it was happening.

I shorted the Aus 200 mini contract this morning, was down only 17.5 points, still only down 23.5.Surely it will lose more than this, I am thinking at least a 50 point down day ?

We will see.My shorting record is atrocious so don't follow me !! ;)
 
:confused: i was watching the massive drop in the DJIA the other night (morning??) as well - the European central bank governor (or one of them) gave a speech suggesting that the US re European rates needing to go up.

apparently the market interpreted that as a signal to the US federal reserve that they should not drop rates.

most interesting for me about that drop was that resources stayed strong!!

i noticed that the rally of the S&P last night did not go above previous highs even in intraday trades. any chartists out there - is that a bearish signal.
 

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