Heinz: IIA sentiment numbers have indeed been punching the top side for quite some time, but I never take my eye off of them. Extremes have correlated exceedingly well with intermediate term turns. And that is true for much longer than my MD efforts.
Granted the extremes of late have been quite high (5 year highs) on the bullish side, and not so low on the bearish side. But, for my price and volume stuff, they provide a nice back drop for where we are in a move and the potential for those IT turns to be signalled. With no climax low since Oct. 98, it seems logical that those numbers have remained exceedingly optomistic.
When I get confirmation of a major index IT low like I did for the NYSE, and I look at the IIA and they've not budged into bearish extremes (although they did moderate over the past 3 weeks), it keeps me suspicious. Especially when there's been no correction in the NAS. But, the 2/25 low is confirmed unless and until it is taken out. IIA numbers and the continuing divergences suggest a high probability that low will be taken out.
I find IIA numbers much more reliable than the p/c ratios. When I meet a college student bar tender in a Wilmington, NC hotel who starts a conversation with anyone who'll listen about his options trades in the Etrade account he's had since fall '98, is it any wonder?
Rydex is not something I've ever followed, so I can't comment. VIX has proved useful to me for the past year for shorter term indications of sentiment. Go with what you know, I suppose.
regards,
Jeff |
