SE index down again

"This is one of the most nonsensical sentences I've ever read."

Obviously, you know not what you speak. The price of an option consists of two parts: the intrinsic value, and the time value. This might make it easier for you:

http://www.investopedia.com/articles/optioninvestor/07/options_beat_market.asp

The price CANNOT depend on the time value, as you claim: time value is PART of the price.

Fool.

Where the stock market is at any given moment usually has a correlation to fundamentals; right now it doesn't. The Shiller p/e ratio is exactly the right chart to look at, and it's the one that I look at, and it is in very dangerous territory. It can, in fact, go up - very much higher up. I don't know how high it will go, or how low. But crash it will.

marco - that's a silly question: some companies are making money, others aren't. IBM did just raise its dividend, but Bank of America didn't. Insiders are buying and selling stock.

>The price CANNOT depend on the time value, as you claim: time value is PART of the price.

?

another day of pain..stocks and gold up...but hey..even a stopped clock is right twice a day

marco, looking at day-to-day fluctuations is nice and all, and I don't think it's quite time to sell yet, but I don't think we're far off.

The problem, bjw, with what is going on right now is that once one person starts selling, EVERYBODY starts selling. Since this is a rally built on margin, not on volume, as prices fall margin calls get issued, causing more selling, leading to very fast and sudden, deep drops.

The stock market has NEVER risen so far so fast. Especially for no reason. QEII is a dismal failure; silver is its illegitimate child.

A few people have issued warnings about what is happening - but nobody is listening. Oil right now is around $113 a barrel. What I find amazing about Bernake is that he would have engineered such a thing as this, and let it continue unabated. You would think he would have learned from 2008, but he didn't.

When this is over you might see the Dow back down to 8,000. That's not a prediction, but it could very well happen.

> The price CANNOT depend on the time value, as you claim: time value is PART of the price.

Steve, adding a second nonsensical sentence doesn't fix your first nonsensical sentence.

btw, the link you posted to says just what I said...

but thanks for playing.

>The stock market has NEVER risen so far so fast. Especially for no reason.

No reason? The stock market is up largely because the dollar is down.

SWE - please! You're using the LICCdope defense: claim you're right and walk away. The price of an option does NOT depend on its time value, which is what you said. The time value is PART of the price of the price of an option - for an out-of-money option, it is all of the price. We were discussing out-of-the-money puts: their price is ALL time value. Therefore, your argument is that the price of an option depends on the price of an option.

Get real.

usq, the dollar has fallen before, & this was not the result. The result this time is the Fed has flooded the market with money that has nowhere to go, so it goes into financial assets.

steve, you were shorting when S&P was at 1100 and Dow around 10,500 back in aug/sep of last year. If you did in fact hold your short positions, you have a long way to go before you break even let alone make a handsome profit.

I don't follow the S&P, so I don't know where it was. I shorted some at Dow 10,500, made a quick profit & got out. There is still some residual from then, but no more than about $10,000 - the bulk of what I shorted I shorted around Dow 11,500.

But it makes no difference - it's an inverse ETF & there is no margin interest. I just hold it. If I were managing someone else's money I would do it differently, but the paper loss I can handle. It's just one part of my investing style; as I said, the bulk of my money is in cash, & I also hold real estate & I will be buying more - just, in Florida, where it's cheap again.

I said, this move above 11,500 has taken me by surprise - I would have never guessed that the Fed would allow this to go on for so long. Even Greenspan would have said, "Irrational Exuberance" or something similar (which comment cost me $100,000!). But the longer it goes on, the higher it goes, the worse the crash is going to be.

It's not possible for this not to crash, and the end is nigh upon us. The charts are all setting up just like June 2008, the last time that leverage got this high. There is no fundamental economic reason for this to happen - if there were, and if there was massive volume, I'd have been out of the shorts a long time ago. But average daily volume in April on the NYSE was 166 million shares - nothing. It's Ponzi action, and when it crashes it may very well cause the double-dip that Bernake is trying to avoid.

I watched part of his press conference - the economic forecasts are all going to be revised downward, and significantly so, and the inflation forecast will be revised upward. Right now on a CPI basis we're at 6% per year: f*ck core, people don't live on core. If $115 a barrel oil doesn't kill the recovery, then the crash back to $70 will.

>The price of an option does NOT depend on its time value, which is what you said. The time value is PART of the price of the price of an option - for an out-of-money option, it is all of the price. We were discussing out-of-the-money puts: their price is ALL time value. Therefore, your argument is that the price of an option depends on the price of an option.

?

>When this is over you might see the Dow back down to 8,000. That's not a prediction, but it could very well happen.

Donald Trump could take lessons from that sentence on more effective doublespeak.

Interesting

stevejhx
about 9 months ago

According to today's data, the recession was worse than previously thought, and the economy is slowing down rather abruptly. I believe that 500,000 jobs must be added each month just to keep up with population growth; we've been adding about 150,000. Foreclosures have hit an all-time high and are getting worse, yet property prices - except for foreclosures - remain sticky. Unemployment has gone down, but only because more people have stopped looking for jobs; whatever growth there was in the economy last quarter was due principally to increased inventories, and not to consumer sales.

It's not often that I agree with Fast Money, but this time I think Guy Adami is right: what's coming for the next 2 quarters looks ugly - a triple-top on the S&P 500, the end of the fiscal stimulus, and deflation. I have seen some anecdotal evidence in my building that landlords are trying to raise rents, but I have also seen that it's not working.

bob420
about 9 months ago

Where is that triple top on the SPX?

stevejhx
about 9 months ago

From June, at around 1100. Briefly above twice, just shy once, can't hold on.

bob420
about 9 months ago

It's tough to call a triple top when it has been higher twice in the last month. 1120 is the big number. Takes that out and look for 1230 or so. The recent trend is up and support looks to be about 1080. There are a lot of bullish indicators at this point. I wouldn't look to get short until that 1080 is taken out.

bob420
about 8 months ago

steve, did you get short?

http://streeteasy.com/nyc/talk/discussion/21952-rents-up-thank-you-satc

stevejhx said:
> usq, the dollar has fallen before, & this was not the result.

there isn't a perfect 1-to-1 mapping of course. nonetheless, the 3-month correlation of SPY vs UUP has wavered around -0.5 fairly consistently for the past two years. this correlation is meaningful and to pretend otherwise is foolhardy.

> The result this time is the Fed has flooded the market with
> money that has nowhere to go, so it goes into financial assets.

agreed that the new capital inflates the price of assets. every real asset has seen spectacular price appreciation, except real estate. united states RE has been flat to down on a nominal basis, let alone a dollar-adjusted basis. (the dollar is down roughly 15% in the past year.)

stevehjx said:
> But average daily volume in April on the NYSE was 166 million
> shares - nothing. It's Ponzi action, and when it crashes it may
> very well cause the double-dip that Bernake is trying to avoid.

why would you look at the NYSE volume only? it is 2011; there are dozens of market venues on which to trade NYSE-listed stocks, and NYSE has been losing market share steadily. its volume is only 13% of total US equity market volume nowadays. see here:

http://nasdaqtrader.com/trader.aspx?id=FullVolumeSummary

Bob - I think you've been at the 420 for too long.

That wasn't you talking about triple tops in the S&P at 1100 and an ugly next 2 quarters? For someone that doesn't follow the SPX, you sure were adamant that it was not going to hold 1100 and that the market was doomed. That was a 25% move up ago.