How soon to the next big correction/crash?

[william the wie]

Trying to determine how far out to buy puts.

 

[LoneLaugher]

Buy some English lessons instead.

I know the answer, but I will not give it to you for free.

 

[JakeStarkey]

Watch the short term rates.

 

[Politico]

What the hell is a put?

 

[eagle1462010]

Deutsche Bank Hopes "Not All Margin Calls Come At Once In Case Of A Sell-Off" | Zero Hedge

Since the records started in the late 1950s, we observe margin debt tracked by the New York Stock Exchange (NYSE) rose to an all-time high in April this year. Most interestingly, margin debt follows the pattern of exponential growth when equity markets surpass previous record historic levels and peaks ahead of the the equity market, i.e. 1/2 month ahead during the “new technologies market” around 1999/2000 and 3 months ahead during the “Great/Global Financial Crisis” (GFC) around 2007/2008. As it is difficult to identify such an absolute peak, we find it useful to look at more sensitive measures, i.e. month-on-month changes. It seems as if a threshold >10% in the m-o-m change delivers meaningful signals when the sequence starts. In this way, it is most alarming to see that the first signal lit up in January this year. Market analysts track margin-debt activity as an indication of investors' appetite for speculative trading. But a potential pitfall for those trading on margin is a sharp decline in stock prices, which can expose investors to margin calls, requiring them to post additional collateral or having their brokers sell their securities. That's why high levels of margin debt can be worrisome – a wave of margin calls triggered by a sharp market correction could exacerbate the selling pressure on stocks, making matters worse. Consequently, high margin debts show the effect of over-leveraging and mispricing of risk in our financial system.

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When will the Fed stop thowing money around...................Is the real question..................

Who knows.

 

[eagle1462010]

BTW. According to Zero Hedge, Margin borrowing is at an all time high again. Which is why I posted that article.

 

[eagle1462010]

Stock Market Crash - History of the Stock Market Crash of 1929

Buying on Margin

When someone did not have the money to pay the full price of stocks, they could buy stocks "on margin." Buying stocks on margin means that the buyer would put down some of his own money, but the rest he would borrow from a broker. In the 1920s, the buyer only had to put down 10 to 20 percent of his own money and thus borrowed 80 to 90 percent of the cost of the stock.

Buying on margin could be very risky. If the price of stock fell lower than the loan amount, the broker would likely issue a "margin call," which means that the buyer must come up with the cash to pay back his loan immediately.

In the 1920s, many speculators (people who hoped to make a lot of money on the stock market) bought stocks on margin. Confident in what seemed a never-ending rise in prices, many of these speculators neglected to seriously consider the risk they were taking.

Signs of Trouble

By early 1929, people across the United States were scrambling to get into the stock market. The profits seemed so assured that even many companies placed money in the stock market. And even more problematically, some banks placed customers' money in the stock market (without their knowledge). With the stock market prices upward bound, everything seemed wonderful. When the great crash hit in October, these people were taken by surprise. However, there had been warning signs.

On March 25, 1929, the stock market suffered a mini-crash. It was a prelude of what was to come. As prices began to drop, panic struck across the country as margin calls were issued. When banker Charles Mitchell made an announcement that his bank would keep lending, his reassurance stopped the panic. Although Mitchell and others tried the tactic of reassurance again in October, it did not stop the big crash.

By the spring of 1929, there were additional signs that the economy might be headed for a serious setback. Steel production went down; house construction slowed; and car sales waned.

At this time, there were also a few reputable people warning of an impending, major crash; however, as month after month went by without one, those that advised caution were labeled pessimists and ignored.

 

[eagle1462010]

[ame=http://www.youtube.com/watch?v=JnN-SR_2ovA]Resistance is Futile - Star Trek: First Contact (8/9) Movie CLIP (1996) HD - YouTube[/ame]

 

[SFC Ollie]

I like to keep things simple. When the fed stops pumping them up, they will fall and fall hard.

 

[william the wie]

What the hell is a put?

A way of limiting your losses when shorting the market.

 

[william the wie]

I like to keep things simple. When the fed stops pumping them up, they will fall and fall hard.

True but is the key rate, size of pumping or size of pumping relative to the size of the pumped up money supply? It do make a difference.

 

[Zander]

Trying to determine how far out to buy puts.

The percentage of bulls in the Daily Sentiment index (trade-futures.com) peaked back in May at over 90%. In July it went to 89% and last tuesday (of this week) it hit 88%. Investor sentiment is so bullish that the market is rising even on bad news.

Personally, I'd buy cheap, deep out of the money S&P500 puts with a long expiration- out to June or Sept 14.

Happy trading!

 

[william the wie]

Trying to determine how far out to buy puts.

The percentage of bulls in the Daily Sentiment index (trade-futures.com) peaked back in May at over 90%. In July it went to 89% and last tuesday (of this week) it hit 88%. Investor sentiment is so bullish that the market is rising even on bad news.

Personally, I'd buy cheap, deep out of the money S&P500 puts with a long expiration- out to June or Sept 14.

Happy trading!

Thank you kindly sir. I am also selling SPLV (S&P low velocity fraction) puts while buying mini-S&P puts, LQD puts and VNQ puts. And good trading to you as wel.

 

[Politico]

What the hell is a put?

A way of limiting your losses when shorting the market.

Then he should have said Put Options in which case he can set them out as far as he wants.

 

[jwoodie]

November 2014: If the GOP loses the House, investor confidence will evaporate.

 

[SFC Ollie]

November 2014: If the GOP loses the House, investor confidence will evaporate.

November 2014: If the GOP loses the House, investor confidence will incinerate.

Fixed it for ya....

 

[william the wie]

November 2014: If the GOP loses the House, investor confidence will evaporate.

I don't think that is politically possible.

 

[Snouter]

Next election. They fleeced big time when Barry just got into office, but won't do anything until Barry is out of office.

 

[Geaux4it]

Figuring Out The Fed | Zero Hedge

Since 2008, the Federal Reserve has been trying one program after the other in order to kick-start the US economy. It culminated in currently buying around $1 trillion of bonds a year. But economic growth remains weak. Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much? The people at the Fed are not stupid, so there must be a rational explanation. This is an attempt to figure out their 'game plan'.

 

[editec]

Figuring Out The Fed | Zero Hedge

Since 2008, the Federal Reserve has been trying one program after the other in order to kick-start the US economy. It culminated in currently buying around $1 trillion of bonds a year. But economic growth remains weak. Why does the Fed continue its ultra-lax monetary policy despite evidence it doesn't help much? The people at the Fed are not stupid, so there must be a rational explanation. This is an attempt to figure out their 'game plan'.

Maybe it isn't the national economy they're helping?

After all none of this money is getting into the overall economy..its propping up the banks balance sheets and to some extent (maybe a lot, I do not know, not sure anuone does) preventing
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