Wednesday, October 29, 2014

Contrarian Bones Aching

S&P500 is at 1976 right now. From the intraday low of 1820, this represents a MASSIVE 8.5% gain over just 10 trading days.

The SPY from early September has been selling down on large volume, while the "bottom" in October has since seen the opposite. Rising prices with declining volume. No volume, no confirmation.

The R2K is even more cray cray. From the intraday low of 1044, the index is now at 1142. This is a even more disgusting 9.5% gain over 10 trading days. Same story for the volume.

Breadth is waning, divergences all over, overbought conditions on every single timeframe. Unsustainable fundamentals and massive investor delusions. The only thing that is keeping me from betting the whole house is risk diversification and knowing that the markets can stay irrational much longer than my account can stay solvent.

This is totally not recommended, but I'm doubling down my short punts at this level for a short-term reversal at least, if not a steep move lower.


By the way, no surprise, but if the US markets close green today, you can bet your sweet ass your that the STI opens green tomorrow as well. I don't understand why people are in awe of "market gurus" being able to predict if the STI opens green or red. Look at the US close and I would say 8/10 times it follows through. The whole equity trade globally is practically based on the US markets these days, with the exception of major domestic market news like elections and what-nots. This isn't healthy at all.

Then again, my views have been explicit and stubbornly steadfast for the longest time. Don't mind me, I'm just another crazy person.

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