MARKETS long term short, short term long.
Markets have dropped to extreme levels, down to a near technical correction, so I have to think that peoples' psyche will kick in here, and that institutions/HFTs will target all depressed "good" companies, and scoop them up for lower prices.
Additionally, I am highly focused on options and overall market advance/decline trends. Regarding these, the P/C ratio for SPY has been decreasing to lowest in over a week, at just barely above 1, indicating an enormous amount of call buying. I have to evaluate these with prejudice, however, as they could be hedges for long positions in the market, but either way it's still a useful metric. Similarly near term volatility has finally started decreasing aver 5+ trading days of increases, and I've found weekly reversals to be meaningful at the very least on a short term basis. UVXY has the highest P/C ratio in the last week as well, to go along with bullish market expectations.
Technically, a correction is viewed as a short term bottom, and thus the violent bounce in August. If we pick up steam after the lows below 1900 in SPX, there's a good chance to test the 2000 before anything else happens. My focus here would be to short UVXY, as with even a slow market incline the volatility should evaporate.
From the news side, I do think there are some positive signs for a bullish behavior. China has stopped forced devaluation of their currency, where it would allow them to be much more export friendly, but also could cause a world markets meltdown well below the current levels. North Korea news has been priced into the volatility indexes, and I find it hard-pressed that anyone is really considering them a "factual" imminent threat.
The last bit of a puzzle would be for the FOMC to come out and reiterate some dovish signals, like a freeze in rates increase; or for the OPEC/US or any other oil producer to continue reducing the supply; re-imposing sanctions on Iran and so on.
My point is that something HAS happened to quell the markets from China, but it was offset by oil/north korea/and general world currency and other unrest. It's a chance that it may be enough, but more than likely it would not be. I think some additional actions (as suggest above for example) have to be taken, to re-establish market stability and eliminate volatility. Devaluing dollar would likely be the EASIEST and best idea at the moment.
Additionally, I am highly focused on options and overall market advance/decline trends. Regarding these, the P/C ratio for SPY has been decreasing to lowest in over a week, at just barely above 1, indicating an enormous amount of call buying. I have to evaluate these with prejudice, however, as they could be hedges for long positions in the market, but either way it's still a useful metric. Similarly near term volatility has finally started decreasing aver 5+ trading days of increases, and I've found weekly reversals to be meaningful at the very least on a short term basis. UVXY has the highest P/C ratio in the last week as well, to go along with bullish market expectations.
Technically, a correction is viewed as a short term bottom, and thus the violent bounce in August. If we pick up steam after the lows below 1900 in SPX, there's a good chance to test the 2000 before anything else happens. My focus here would be to short UVXY, as with even a slow market incline the volatility should evaporate.
From the news side, I do think there are some positive signs for a bullish behavior. China has stopped forced devaluation of their currency, where it would allow them to be much more export friendly, but also could cause a world markets meltdown well below the current levels. North Korea news has been priced into the volatility indexes, and I find it hard-pressed that anyone is really considering them a "factual" imminent threat.
The last bit of a puzzle would be for the FOMC to come out and reiterate some dovish signals, like a freeze in rates increase; or for the OPEC/US or any other oil producer to continue reducing the supply; re-imposing sanctions on Iran and so on.
My point is that something HAS happened to quell the markets from China, but it was offset by oil/north korea/and general world currency and other unrest. It's a chance that it may be enough, but more than likely it would not be. I think some additional actions (as suggest above for example) have to be taken, to re-establish market stability and eliminate volatility. Devaluing dollar would likely be the EASIEST and best idea at the moment.
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