Put Buying Is Rampant

With the major market averages near their yearly highs and recent failure to break above Dow 10K and Nasdaq 2K, more than a few investors are stepping up to buy puts in order to protect their yearly gains. This is exactly the type of move you want to see if you're long stocks.

Like I've said many times over the past couple of months, while most surveys show that investors are bullish, they've simply been acting in bearish ways by having lots of cash or quick to take their profits. This is a healthy sign that the market is ready to advance higher, once the pessimism builds again. All we need is for the short-sellers and nervous holders of stocks to begin trading, and we'll be set up for the next move higher. Looking over the CBOE option/puts data, the bears are starting to come back out in full force again and mark my words, they'll regret it shortly. Bottom line - I'm inclined to start putting money back to work on the long side again and to start closing out a few of my short positions. Have a great evening!