Is the Market Correction Finished?
- Posted by Patrick Ceresna on February 16, 2010 filed in Options Market
Now that we have seen a solid market consolidation it begs the question as to whether this is it for the selling? We have been targeting the downside support on the XIU in the $16.00-$16.25 area for months. The first test of the support line has been successful and we are now working our way higher. We are very interested in the price action in this $16.80-$17.20 level, which marks the natural retracement higher. If the bulls fail to rally the XIU above this area, the window remains open for a retest of that support line or even a break lower. The only way we will start considering bullish scenarios would be a sustained rally above the $17.20 area.
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Regards,
Patrick Ceresna
March 5, 2010 at 3:52 pm
Hi, I would like to say that as of March 5, 2010 with the TSX up past 11,900 points, that is way too overbought! Buying in now is like jumping into Euros before even Spain’s problem has not come out yet! DRR Double Short Euro and SDOW Proshares Ultra Short Dow are the two to buy and hold for the intermediate term. Our year will be a down year, and shorting or inverse ETF’s and betting bearishly is the way to win these days. Don’t get on the bull side because you will be stuck on the wrong side of the trade.
February 16, 2010 at 8:38 pm
@JB - Our statistics show that XIU volume for Jan 2010 went up by 345% over 2009 (roughly the same of open interest). If you are comparing to a US-equivalent like the QQQs, you could say it is low; US and Canadian investors don’t compare when it comes to trading options.
Furthermore, institutionals are not active daily in the market. They do come in, but you have to look at a one-month period.
You might consider looking at the open interest instead of volume. It will be a better measure of the XIU market.
February 16, 2010 at 3:47 pm
A very stupid question:
I’m a retail investor have recently been trading XIU calls and puts through the Montreal Exchange and have been surprised at the low volume. Why is there such low volume? What are the institutionals using? Are they using OTC instruments outside the exchange?