Monday, May 7, 2007

Market close to an impending crash

Today Dow hits its usual new record high again, crossed 13300. 5 new records in a row! CNBC is again in its 2000 spirit! People are talking about 14000 in May, by this rate, we're talking about 14500, not 14000. There are several things show signs of a top and impending correction:
  1. We have Dow led all major indices again, and Russell 2000 again showed weakness. The overall markets were weaker than Dow again. Only a few stocks paint the rosy picture again.
  2. AA shot up 8% on the news it's going to buy AL (up 35%, over the target price), this MA events get too crazy now. If the logic holds up, why don't we just have companies buying each other and they all go up? Remember 2000 internet bubble?
  3. Consumer credit jumped to 13.5B vs 4.5B expected, and market continued to rise, thinking we can borrow to rich?
  4. We have pending Fed meeting and then the seasonal weakness in summer, but who cares, buy Dow is the way to go.
  5. In China, Shanghai index is up 50% since Feb 5th low. And it's the Feb.27th Shanghai index's 9% drop triggered world wide sell off.
  6. Even the market doesn't crash, I think a correction is very near. Even for bulls sake, we need a pull back. The more it continues to shoot up without any pull back, the sharper the correction it will have. When everyone exits, it won't be pretty.
  7. I traded AMZN puts today and had a nice profit. It's a 50% gain in one day. Sometimes you have to wonder if you can trade like this, you don't need to do anything else. But it's a small position and it's very lucky. I also added two more small puts today. I hope they are good trade for short term. And will sell if it doesn't work out this week.
  8. So it's great to be in cash, and it's risky if you want to short. I'll take the risky road. Small positions please.

2 comments:

Anonymous said...

"Consumer credit jumped to 13.5B "

What URL / source did you get that? Sounds like a useful URL to add to ones econ outlook bookmarks.

Here's a few for you in trade:
http://bullandbearwise.com/FOMOchart.asp
Higher the FOMO $$ more the market is inflated up. Don't short against a back drop of FED inflating. ;-(

http://www.gmtfo.com/reporeader/OMOps.aspx
The same info, another source.

All of these are keepers. Good luck! Curt

http://stockcharts.com/h-sc/ui?c=$bpindu,uu[w,a]dalaynay[p][ilp14,3,3!lk14]

http://www.nowandfutures.com/daily.html

http://blog.nowandfutures.com/

http://www.nowandfutures.com/forecast.html#dates_to_watch

SimpleTrade said...

http://biz.yahoo.com/c/e.html
I got the infor from Yahoo.
Good luck!