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*Rare (Over)Extended Irrational Market*

 
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PostPosted: Sat Nov 25, 2006 9:36 am    Post subject: *Rare (Over)Extended Irrational Market* Reply with quote

This is an update of last month's "Rare Extended Irrational Market" article. The chart shows SPX pulled-back a little, grinded higher, and stayed high with little volatility over the past month. Short-term technical indicators remained unreliable, while VIX fell below 10 last week. Also, the SPX to VIX ratio rose almost straight up from a very low level to a very high level over the 4 1/2 month rally. Many technical indicators were severely overbought for extended periods. The only reliable indication of direction was panic buying, including short-covering, which took place on quick and shallow pullbacks. SPX, and the general market, closed each option expiration week in July August September October and November at the highest level it could reach. So, Max Pain expirations also failed.

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