by Kurt Kallaus
Financial Sense
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.