Re: Financial topics
Posted: Tue Jan 14, 2020 1:29 am
At this stage, the driving force in this market no longer has anything to do with anything rational. The driving force at this stage is FEAR.
But this is not a fear of decline. Instead, it is a fear of higher prices. The short sellers in Telsa, for example, have driven that stock up 200 points in the last two months and over 50 points just today alone! This massive advance has had nothing to do with earnings or growth. This spike was all about one thing: FEAR. Fear of higher prices, and now shorts are paying anything they have to to get out before it goes higher!
The Fear Greed Meter from CNN is calculated from these components and is day after day registering near-record numbers. Those numbers reflect the record level of GREED in the emotional buying this month, but even more, they reflect FEAR. Fear of higher prices. That Fear of higher prices is producing the highest Put/Call ratios since the January 2018 Top. It's also providing the highest Equity-Only (meaning STOCK Options) since 2014. This "fever" is creating the lowest 10-day average of TRINQ (the "TRIN" for NASDAQ) since 2007.
A FEVER of Fear of getting caught short or missing what "the crowd" believes will be sharply higher prices ahead is driving the bus now. The crowd has no fear of the downside. But they are scared to death now of higher market prices. This behavior is, of course, totally irrational. But rationality at this stage has become irrelevant.
That is just what Gustave Le Bon's book, "The Crowd," is all about, the hypnotic effect crowd-think has on otherwise rational and intelligent individuals. It produces thoughts and actions these normally sensible individuals would never even consider absent the contagion of getting caught up into the crowd emotion. But as occurs whenever this point in the cycle happens, that fear will break very soon. When it does the prices markets will do what they always do under these conditions.
When will the fever break? Soon - but we cannot know exactly which hour. We do know that at this stage, it always does. Once it breaks, my actions will not be about a "trade." It will be all about a deep sustained decline.
The sentiment is screaming, “TOP!”
But this is not a fear of decline. Instead, it is a fear of higher prices. The short sellers in Telsa, for example, have driven that stock up 200 points in the last two months and over 50 points just today alone! This massive advance has had nothing to do with earnings or growth. This spike was all about one thing: FEAR. Fear of higher prices, and now shorts are paying anything they have to to get out before it goes higher!
The Fear Greed Meter from CNN is calculated from these components and is day after day registering near-record numbers. Those numbers reflect the record level of GREED in the emotional buying this month, but even more, they reflect FEAR. Fear of higher prices. That Fear of higher prices is producing the highest Put/Call ratios since the January 2018 Top. It's also providing the highest Equity-Only (meaning STOCK Options) since 2014. This "fever" is creating the lowest 10-day average of TRINQ (the "TRIN" for NASDAQ) since 2007.
A FEVER of Fear of getting caught short or missing what "the crowd" believes will be sharply higher prices ahead is driving the bus now. The crowd has no fear of the downside. But they are scared to death now of higher market prices. This behavior is, of course, totally irrational. But rationality at this stage has become irrelevant.
That is just what Gustave Le Bon's book, "The Crowd," is all about, the hypnotic effect crowd-think has on otherwise rational and intelligent individuals. It produces thoughts and actions these normally sensible individuals would never even consider absent the contagion of getting caught up into the crowd emotion. But as occurs whenever this point in the cycle happens, that fear will break very soon. When it does the prices markets will do what they always do under these conditions.
When will the fever break? Soon - but we cannot know exactly which hour. We do know that at this stage, it always does. Once it breaks, my actions will not be about a "trade." It will be all about a deep sustained decline.
The sentiment is screaming, “TOP!”