wavefollower
following the wave and trading happy
Today is an up day, but how is those market breadth indictors?
1. In an up day, the percentage of stocks above their 50MA should increase?
50MA probably is too short for some traders, how about 200MA which is a critical bull/bear line.
2. NYSE McClellan Oscillator. It goes ahread of market sometimes.
3. Total Put/Call ratio: it goes up, so who is buying "put"?
how about CPCE? it is down. Thus most traders are optimistic on stocks. Without looking at CPCI, we already know it must go up today(otherwise CPC cannot go up). Who usually buy index puts to hedge the common stocks. Certainly big funds buy markets index puts to hedge the stocks. So big funds seem precautious on the market.
4. When the market breadth is not good, MM could pump the market index to let it look good. Who is MM, FED is one. Besides it, another resource of money is abroad investors. When US Dollar is down, if you have large amout of Euro, how could you maximize your investment return. One way is to exchange Euro to Dollar and buy US stocks, it might be more profitable than buying european stocks instead. Becasuse you could exchange for more Dollars and buy more US stocks, and when Dollar is up, you could sell US stocks and buy back Euro and european stocks. This is a bit different from "currency carry trade" but share some common ideas.
5. So what is the conclusion? Frankly speaking, I do not have. In the earning season, there is lots of uncertainty, be vigilant and be agile and smart.
