Could fear possibly return to this virtually-always-levitating market of ours? In my post from October 16, I suggested XIV (the opposite of VIX) was “ready to rally.” Rally it did, but I think it may be poised to tumble (which means that fear will come swooshing back into this “market” of ours).
The Dow Transports hit a lifetime high today (see, that little sell-off that happened earlier this month – – didn’t mean a thing). The NASDAQ is near its highest level since the Internet bubble. The VIX has lost over half its value in just a couple of weeks.
But in spite of all this, the high-yield market seems to have stalled out. Yes, it had a big bounce from October 15th, just like everything else, but it doesn’t seem as, shall we say, irrationally exuberant as everything else. (more…)
After the explosive eight-day surge in the markets (following the bottom last Wednesday), a whole cache of ultrashort ETF charts looks very interesting on the long side. Below are just a couple of examples, and take note how cleanly resistance has magically changed into support. Next week, particularly Wednesday’s FOMC announcement, will clarify whether these “long” positions (although actually short the market) are as profitable as they might appear.
So many ultrashort funds have turned the corner to the upside, it’s really quite surprising. One in particular is the triple-bearish-on-financials fund, shown below. It is exhibiting the same kind of pattern shared by so many other short funds: an emergence above a descending trendline that goes back for a long, long time. I’d certainly wait for prices to relax back down to the trendline, but before too long, these might be fantastic long positions.