Are You Scared

While call buying tapered off a little into the end of the day, there is still not much fear out there. Most people are still more concerned with catching the bottom, than with losing money. While I took some profits on my treasury long, I did not cover any shorts. Have a good night.

7 comments:

Chaos! said...

Call buying remained way too big. I agree. There's more selling coming. Didn't cover aything.

Anonymous said...

Question for Tsachy or other readers: Why does market tend to go in trend direction during expiration week? Wouldn't they want to bring the market down to make all those short term calls obsolete?

Tsachy Mishal said...

This is just a wild guess/theory I have on why the market doesnt usually change trends during expiration week. The winners (call buyers) will roll their positions putting upward pressure on the market.

While the losers (the put buyers) are faced with the decision of putting up more money to roll their positions or to allow positions to expire. Most people won't throw more money into a losing trade and expiration serves as a capitulation point.

Another theory I heard was that the market waits for everybody's downside protection to expire before going lower.

Anonymous said...

Thanks Tsachy, that was very insightful. I never knew that stuff. So, follow up question, do you see the market taking any big dips this week?

Tsachy Mishal said...

Were this not an expiration week I would say the top is in. But it is, so I would not be surprised if we held up for the balance of the week. If a correction does not start this week I believe one will start next week. That is the reason I am willing to stay short.

PJ said...

Yes, I'm scared -- but then I am short and have been for months.

Re this week, I wouldn't be surprised if there's still a bit of pressure through the 30 yr auction and then a rally after Treasuries are sold into expiration.

Anonymous said...

no i'm not scared because i own edz and china is down 3%