Well it's been a while since I've posted to the blog and the main reason is that I'm waiting for some certainty to the markets..... Everyone seems to be sold on the fact that the recession is over and we're on our way back to the top... Well I am NOT one of those people.
I believe that we are over-bought at these levels of the market. Stocks such as AAPL have surpassed their all-time, pre-recession highs and this does not intuitively make sense to me - the rise has been too far and too fast.
Even though news is not a technical indicator I believe that the way that the media reports the news is. During the downturn all reported and emphasised news were bad and the market reacted by over-selling. Near the bottom and on the way up, the reported news was a mix of good and bad. The rally was further sustained by continued reporting of unexpected rise in house prices, surprise declines in unemployment rate, and upbeat earnings. Now we are again seeing a mix of good and bad news. It is interesting that data such as lower unemployment rate is not having as much of a rallying effect on the market anymore.
I am selling far out of the money calls on the broad market and stocks such as GOOG, AAPL, MA, and other which I think are over-bought.
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