Stock Market Outlook
These are the major broad market put-call ratios that we follow: the equity- only, the weighted equity-only, the NYSE/NASD equity-only breakdown, the $OEX weighted, the S&P 500 futures weighted, the NASDAQ- 100 ($NDX) weighted, and the QQQ weighted. All of these charts are on sell signals now. Yes, I realize that the market has been going up, and yes, I realize that CNBC is wildly bullish about all aspects and sectors of the market right now, but I think the unanimity of opinion of these charts is worth noting: one should be carrying tight stops on his long positions. It is probably smartest to wait for some break in the market's momentum before actually buying puts or going short. Meanwhile, our oscillator has moved back above +200, which is good news in that it means breadth has expanded in the overall stock market. That, of course, is positive. However, it also means that the oscillator will generate a sell signal when it falls back below +180. Usually, when there are simultaneous sell signals from both the equity-only put-call ratio and the oscillator, that is a fairly serious situation and should be respected. It appears likely that we will have that potent combination occurring within a short time, which would once again make July a market top. The only thing that could avert these simultaneous sell signals would be for the equity- only ratios to roll back over to buy signals before the oscillator gives its sell signal. Rather than trying to guess what will happen, we will just react to the simultaneous signals if they occur.
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