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Monday, January 22, 2018

Daily update 1/22 SPY option data

I feel like I am in an alternate reality where selling stocks has been outlawed.

Instead of pent up selling from last year there was pent up buying demand.  Breadth was +60%.  New highs picked up to 277.  New lows slipped back to 50, but remain elevated.  Price is getting a little parabolic here.

Futures keep on going up.  No price is too high. 

The melt up continues.  I keep hearing Kevin O'Leary on CNBC saying this is a great time to be an investor.  He sounds a bit euphoric these days.  I heard that M&A announcements are the highest amount to start the year since 2000.  We are seeing bullish sentiment extremes not seen since 1987.  Comparisons to those years are not particularly good for bulls in the long term.  However, in the short term there appears to be nothing stopping the market from going higher (except me saying there is nothing stopping the market from going higher).  Some day the extreme overbought condition may matter.

Here is the latest chart of SPY option data after last week's expiration.

The strike near the current price with the most calls is 186.  The next highest strike is 281 which SPY surpassed this morning.  Delta hedging from that strike might have helped accelerate the market today.  If SPY keeps progressing on the upside there could be more delta hedging up through 286.  Put support comes in around 275. 

I just don't get it.  No matter how hard I try.  Once upon a time a friend of mine bought a TSR-80 color computer and let me play with it.  It did not take long for me to see some day everybody would have a home computer and I went off to college to become a programmer.  While working at IBM in the early 90s I was exposed to the internet a bit before the world wide web got started.  It did not take long with the Netscape browser to see the power of the internet and that it would dramatically change the world.  It was obvious.  I hear so many people talking about crypto currencies and blockchain like they will change the world like the internet and home computers did.  Blockchain has been around for 10 years already.  Why all of a sudden is it going to forever change the world?  While I am sure there will be some uses for it there isn't anything it can do that I can see that could not be done another way.  They pitch crypto currencies as an asset class to themselves.  They say they are a store of value because they are limited.  While each individual crypto currency might have a finite number of units there is no limit to the number of crypto currencies that can be created.  There will certainly be better implementations then bitcoin.  What is to stop people from just simply moving on to the next hot currency leaving the old currency with little to no value?  Nothing.  I just don't get it.


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