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Dr. Kris
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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Market Notes: Market Looking Toppy -- July 21 3 comments
    Jul 22, 2013 12:06 AM

    We've been experiencing technical difficulties with our server and so this weekend edition of the blog will be very brief.

    Rather than leave the blog until Monday, I felt it was necessary to inform my readers that the market is looking quite toppy, both technically and fundamentally. In Thursday's blog we touched on why the market may already by overvalued. Friday's action showed that we may, indeed, be nearing a top for the following reasons.

    The first is that the sharp drop in volatility (-9%) brought the VIX into bullish contrarian territory (around 12.5 and below is contrarian). Every time the VIX has hit this level, the market has pulled back. Sure, the VIX can hang here for a while even as the market continues to rise, but it probably won't be too long before it corrects.

    If you'd rather be safe than sorry, you might wish to consider taking profits especially on those stocks that have run-up a lot. As previously mentioned, you can still play the upside by buying call options or bull call debit spreads (to lower your entry cost even further) as options are now extremely cheap.

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Comments (3)
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  • Perkins Cove
    , contributor
    Comments (625) | Send Message
     
    Good blog post. How did you get so wise....? (BTW, love the photo....grin)
    22 Jul 2013, 08:44 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (319) | Send Message
     
    Author’s reply » Nice to see back, PC!
    22 Jul 2013, 01:27 PM Reply Like
  • Perkins Cove
    , contributor
    Comments (625) | Send Message
     
    Watch for the red biplane. That's your sign......

     

    It may tell you to make a turn. Heads up gal...luv ya....Skip
    22 Jul 2013, 01:45 PM Reply Like
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