Market manipulation via the options market has reached unprecedented extremes. Highest greed index in at least two years

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Revisiting Baltic Dry Index’s Message

The BDI peaked on May 10, 2023, which was 25 trading days ago.  That should mean that a top is due for the stock market right about now.  The BDI then fell hard to a June 2, 2023 low, and losing almost half its value in that decline.  The magnitudes of the BDI’s movements do not get equaled by the stock market; that is not how this relationship works.  The proper message to take from what the BDI does is to note the direction of the trends and the timing of the turns, rather than trying to formulate an expectation of how much of a move you are entitled to.  And then you should also remember that inversions do happen, so one should not fully count on the veracity of the message.

But when it fits with other insights, it can be a nice confirming message.  Seasonality analysis shows us that the stock market typically makes a dip in the second half of the month of June, and so starting a dip now as the BDI suggests would fit well with that.

 

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