The Grand Plan
The S&P500 Cash index open interest for # of contracts is 912,797 Calls to 1,062,200 puts - The dollar value for those contracts as calculated by the Bid - (what they could be sold for now) is $9.827Billion Calls and $2.427Billion Puts.
So to look at the traditional P/C ratio based on # of contracts open it's biased to a Bull mentality. I posted Open contracts, an $ value on 12/31/99 stating that I had not seen this great of a divergence in the dollar value since October of 1999. The Values at that time were Calls $11.3Billion to Puts $2.2Billion.
The will adjust to an equilibrium, and what I have found, as in October before the turn with SPX at about 1235 the spread $P/C was about $2.4 Billion biased to the Call Side. I have researched this and have found that during a Bull Market This Call $ Bias is always positive, and will switch to a negative positive bias during a Bear Market.
So, The dollar amounts must tend towards equalibrium; Which means the $ divergence will find balance, if this is still a Bull Market - to $6.8Billion Call and $4.4Billion Put which would equate to 1265 on SPX Cash.
The markets have currently conditioned everyone that there will be dips, and if you buy them, I will only bounce right back up, young analyst are terming what happened Monday - Wednesday last week as a sharp correction, an Markets are over sold. This stuff is not this simple; But Alice, Biff, and Buffy who are conditioned to buy these dips, think they are market wizzards.
The NDX towards the close penetrated a critical support resistance level of 3500 on Friday. Not taking anything away from the Tecnical Analysis Guys on the thread, But what does a close above a support indicate? It's got to move higher. Basic Fundamentals with Long Bonds approaching %7.00 don't allow that. It was a Trap! Within 2-3 weeks the markets will balance themselves to equalibrium on SPX Cash at 1250.
Caviet!: I'm a nice guy and I wouldn't bet you're dollar on this happening! -vbg-
Best to All
John |
