Today my sentiment work has the lowest bearish reading I have seen since I started doing this work in 1996 (for some of it) and 2001 for the rest. I realize it is treble witching and options "extirpation", but that happens four times every year. Whether or not we get the Santa rally, this market is skating on thin ice.
Using plain Jane VIX as a proxy (imperfect) for my stuph, now looks a lot like conditions in December 1993 and December 1995 before the next years' corrections and subsequent big bull runs on increasing volatility.
Using plain Jane VIX as a proxy (imperfect) for my stuph, now looks a lot like conditions in December 1993 and December 1995 before the next years' corrections and subsequent big bull runs on increasing volatility.
Bill Hester of Hussman Funds, who does excellent statistical work, has recently posted an analysis of what the markets do in presidential second years, which basically is to reinforce the annual seasonal downward move from January to October. This would also fit with a bi-phasic pullback in 2006, which in Hussman eyes might be deeper than usual because of what they see (house bias) as persistent over valuation.
Personally, since I have to live on my money the rest of my life, except for trading profits--and I'm tiring of trading--I have been selling off parts of grossly appreciated sectors of the past year and gradually hedging long term (and hopefully superior) core holdings. For hedging I am using SP futures (which now gives an interest rate kicker to short positions: three month SDP futures are eight handles ($2000) per contract above the expiring contract, so you make $2000 being short even if the SP500 stands still for three months. In cash accounts (retirement IRA's) one uses Rydex or Profunds "double down" or 200% short funds the same way.
I thought last week that gold was done for a while, and my old buddy, I M Vronsky, put up the piece at Gold-Eagle which I had previewed in drat here at the blog. Durong 2005, people who got scared out of Euros and Yen, but eschewed dollars and/or also bought gold, are reversing that play.
http://www.gold-eagle.com/editorials_05/drake121205.html
Personally, since I have to live on my money the rest of my life, except for trading profits--and I'm tiring of trading--I have been selling off parts of grossly appreciated sectors of the past year and gradually hedging long term (and hopefully superior) core holdings. For hedging I am using SP futures (which now gives an interest rate kicker to short positions: three month SDP futures are eight handles ($2000) per contract above the expiring contract, so you make $2000 being short even if the SP500 stands still for three months. In cash accounts (retirement IRA's) one uses Rydex or Profunds "double down" or 200% short funds the same way.
I thought last week that gold was done for a while, and my old buddy, I M Vronsky, put up the piece at Gold-Eagle which I had previewed in drat here at the blog. Durong 2005, people who got scared out of Euros and Yen, but eschewed dollars and/or also bought gold, are reversing that play.
http://www.gold-eagle.com/editorials_05/drake121205.html
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