r3anand

Market EXTREMELY complacent right now; long VIX

Long
CBOE:VIX   Volatility S&P 500 Index
"Be fearful when others are greedy" - Warren Buffet.
More applicable now than ever !

I've looked at the put/ call ratio as well as VIX which reflect extreme greed and a broken market. This type of euphoria that "stocks can never go down" is only a belief of dumb money and a strong indication of a top.

Comments

I wouldn't be too quick with this.

First off, Ideas like the one posted have been frequent visitors here for the last 6 months and even though they seem reasonable, we are not living in reasonable times. Many who have expected the market to collapse, have lost a lot of money.

The fed is non stop pumping money into the markets and that has no end in sight as of right now. Along with that, there has already been a massive cash injection into the economy and it has padded a ton of pockets. It's not too far fetched of an idea to be thinking that stocks will continue to rise. It would DEFINITELY be ridiculous, but would it be any more ridiculous than the massive amount of money that is being created out of thin air? I think not.

We have never seen anything like this in history and that brings me to believe we may just grow a bubble larger than anyone has ever seen in history.
+14 Reply
@beckunlmtd, bingo the market will be propped till 2023 w/4500-4600spx high and 38k+ dji
+1 Reply
r3anand beckunlmtd
@beckunlmtd you do make good points and of course I’m totally open to being wrong. These are crazy times and this is a crazy market; learned that in 2020 haha.

But, quite a few people are starting to think along the lines of what you’ve said. If that’s the prevailing sentiment, then that tells me the top is here. Market will fall exactly when you least expect it.

Secondly, the fed has tapered their asset purchases since June high. They’re not trying to support the markets, as big funds and smart money, billionaires, etc have exited.

Thanks for the comment !
Reply
I'm building a UVXY position soon. I agree. A blow off top and then massive tank in early 2021
+7 Reply
Agree with you. I am in UVXY too around 12. The most fearful thing is that the funds have been selling the top since Sep. The insider sells have increased since then i.e. smart money is selling and dumb money is buying the top. Fundamentally the earnings estimates are reducing since Sep too.

But I am conflicted about the timing - maybe a quick drop in two weeks and then test the highs around Christmas followed by major event in Jan. Without a black swan event, we wouldn't go below 3200 (still 10% drop from here on SPX).
+5 Reply
Ibuyblocks sranjan19
@sranjan19, can I ask you about the UVXY ? I have been trading that but I do not FULLY understand it. What is the chatter about december 3rd? Reverse Split? Is there additional risk to owning it short term other than it always heading lower? Any infor appreciated.
+3 Reply
r3anand sranjan19
@sranjan19 spot on ! Smart money are selling to dumb money. However, I do think that once the sell off starts, it goes down straight by 30%. Something like March.
Reply
r3anand sranjan19
@Ibuyblocks I need to look into this reverse split. But on the surface level, it doesn’t sound like a big deal but I’d rather be safe and say I don’t know. If all they’re doing is reducing the float to increase each share price that shouldn’t hurt us ...
Reply
Well explanation!
keeo it up
+4 Reply
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