Going to extremes

The fatigue felt by the stock market today despite the rally in bonds is telling. Most oscillators are showing overbought readings, and contrary indicators like the put/call ratio and the Rydex bull/bear flow of funds have reached levels that are ordinarily associated with market reversals. In the spirit of locking down profits, Macro Man sells out his legacy long SPZ6 position at 1386. In the end, the long strangle position has proven to be marginally profitable. Microsoft earnings tonight could be the next trigger for the market. The stock has had a nice run recently and surely risks disappointing those who have bought on the vague rationale that Vista is going to be released on time (well, the revised time after numerous delays.) A further rally in the SPX will provide an opportunity to scale into shorts, most likely through the purchase of puts (give how low implieds are at the moment.)
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