MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.66

+0.2%

Dec 5 4:00 PM EST

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To: shasta23 who wrote (12056)	4/26/1999 4:37:00 PM
From: pater tenebrarum	of 99985

Stefan, normally the OEX p/c ratio tends to decline as the market goes higher, due to the fact that rising prices encourage an increase in bullishness among options traders. the ratio is a contrary indicator though, so the lower it gets, the closer the market is to a top. when the ratio rises along with a rise in the market, it shows a great deal of skepticism and disbelief, and that argues for the rally to continue. the most recent example for this phenomenon is the rally from the october low, which was accompanied by a consistently high OEX p/c ratio, as it was assumed to be a 'sucker's rally'. the first intermediate term top occurred only after the OEX p/c ratio had begun to deteriorate for about a week. btw, i write a little report on the options-related indicators on this thread every day, so some of my recent posts may give you more insight. regards, hb

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