Friday, December 27, 2013

Ignoring Bond Yields

The market is in the see no evil stage.  We have 10 Year Treasury yields at 3%, extreme bullish sentiment, low put-call ratios, and the Santa rally.  What could go wrong?  And January is a bullish month, so they are just buying 'em here.  I can't follow the crowd so easily.  It makes me nervous getting long these markets, more than going short.  I don't want to be short here either, but I will look to short this bloated market when we get to January, given that we don't go down much for the next 3 trading days.

TWTR looks so overextended, and toppy now, it reminds me a bit of TSLA in May, but I don't see the same upside for TWTR.  First of all, TWTR has a much bigger market cap that TSLA.  Second, TWTR will also have a lockup expiring in the coming months which will provide plenty of supply to dampen the price rises.  TSLA didn't have that.  I can easily see TWTR getting greedy and doing a secondary while there stock is sky high and further adding to the supply.  Social media stocks are a bubble, and you have to treat them as bubble stocks.  Fundamentals eventually will matter, but it is more about supply and demand right now.  

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