Saturday

Extreme

Post a Comment November 20, 2010 – 9:55 am |   | Permalink |  Print This Post |

Indicator 1 (BLUE) : 10 year extreme (Stock market in RED)

Inflationist Indicator

Indicator 2: Extreme

Indicator 2

Our indicators are NOT for short term trading, but measures degree of how overbought markets are. Indicator 1 has gone to unprecedented levels in the last 10 years! Higher than 2007 high. We live in unprecedented times. Meanwhile, the world continues, markets head higher as doomsayers continue to be wrong. It appears like we ARE climbing the wall of worry as headlines are filled with DEFAULT scares every now and then as markets slowly make higher high. We are not participating in the long side, and try our best to be hedged at all times. Emotions do lead us astray at times (eg shorting India - which by the way fell >2.4% Friday even though China and rest of the world went up (Japan included!). I guess if you preach something long enough eventually you will be proven right. Well, our average is 5500 - seem like light years away but we can see light at the end of the tunnel now. Don’t forget our long Dow and subsequently long Nikkei hedge for our India short was closed for a >$20k profit. So even a breakeven on India would be a win.