by Kurt Kallaus
When US stocks broke to new record highs in July we began to see excessive optimism creeping into the indices. In August and September, we warned that a top was forming and lower prices into October were likely. We would extend that corrective phase into November-December given the continued call option speculation by investors.
[…] A modest 4% correction has ensued from the August peak into mid-October. We expect sideways to lower prices into November and possibly December before put option hedging arrives with oversold conditions that are conducive for a more sustainable leg to new record highs.