Wednesday, April 19, 2017

Now They Are Talking

They are finally worried about the French elections, with round 1 just a few days away, and round 2 in just over 2 weeks.  I thought the worries would come up sooner but the market was caught up in Syria and North Korea and didn't have time to worry about France.

However, the market keeps finding those intraday bids just when you think the bottom would fall off equities for a change.  Yesterday, we had that intraday dip down to 2333, and the offers were snapped up by the dip buyers like hungry hippos.  Again.  As I mentioned before, there is an army of dip buyers waiting for weakness to buy stocks, and willing to sell back on a 20 point pop.  It keeps happening.

There is still a lot of complacency out there, and who can fault them.  The market refuses to go down more than a few points here and there.  There is no real sustained selling that would put fear in the minds of the buyers.  The put/call ratios don't signal any kind of fear.  Fast Money traders are calm.

Despite the small drop in the S&P, we had a huge rally in bonds.  The shorts look like they are finally capitulating in full force, and they are the last marginal buyers in these type of situations.  I see very little upside in bonds now, with the last major event, the French elections, about to conclude in a couple of weeks.

I have no edge in predicting the French elections, but I do know that odds are high that there will be a lot of buying when all is said and done.  France will stay in the euro regardless of who is their president.  That is why I started buying late last week and will look to add longs on further weakness which I am hoping for.


Anonymous said...

Aren't you worried about the extreme call buying at the CBOE for the second straight day ?

Market Owl said...

Yes, that is worrisome, although to be fair, I put much bigger emphasis on equity put/call ratio, and that hasn't been low. Interpreting total put/call ratio is sometimes tainted by heavy VIX call options volume.

Anonymous said...

OK, thanks.
The ISEE on the other hand is showing put buying, so maybe you're right.

Unknown said...
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