When the markets do eventually consolidate, there are vast amounts of cash in western capital markets waiting to find a home and it looks likely that equities will be the favoured nesting place. Thus, buyers over the last few months have become reluctant to sell and take profits with the fear that it will not be so easy to buy back in for another cruisy ride as experienced over the last few months.
This view is supported by the option put:call ratio for all USA Option Exchanges which has been >.80 August to date, compared with .68 daily average for July so there is a weight of money betting this market has more to go. Further analysis would reveal more about “when and what” might happen between now and the top.
Mike Lawch’s article this week on covered writes, is perfect timing for those who might want to protect capital gains from the last few months.
So until the markets sort themselves out your editor is going to take a well earnt break (in his view) on Hamilton Island – but with laptop in toe, as he won’t risk missing even a modicum of market action over the coming week!