kleht: Thanks for the very nice research information on the put/call ratio in particular. One of my specialties is apparently the same as yours, which is Market Psychology, or as I like to call it, Psychological Analysis, as compared to Fundamental or Technical Analysis or Monetary Analysis.
I follow the same indicators you do for Psychological factors/indicators, and have noticed that the Public/NYSE specialist short sales ratio has declined to .80, which is neutral at best. The put/call ratio has been bearish for most of the past 6 months, with the exception of a slight blip up in April, as I recall, in the CBOE put/call ratio, which I like better than the OEX one.
Sentiment is definitely too bullish for my tastes, but the bullish advisors have actually declined to 47% recently from over 50% in July, so it is not as bearish as the put/call ratio. BTW, the sentiment readings are not always very timely, as readings can stay high for months before the major correction comes, which is inevitable. I made the forecast in mid-March for a major correction in April and May, from a combination of technicals, including sentiment being too bullish, double top, bearish divergences, and extreme overvaluations.
I do not necessarily agree with the idea that TA is the effect and Psychological factors are the cause. I believe they both are reflections of price actions and supply/demand factors in the marketplace. If we could identify causation, we'd be gazillionaires for sure!!!
As I have outlined in my TA,FA,MA,PA articles previously at RB (and they will be updated for SI in the upcoming weeks), there are so many factors affecting supply/demand that TA is the single best indication for future prices, though I use all 4 analyses.
Seasonally, you are right that September is historically the worst month of the year for the bulls. That is sometimes caused by a July-August rally to retest April highs in past years. This year seems to be a little different in that there was a huge crash in the Nasdaq from March to May, and there is a lack of bearish divergences right now in the technicals.
I am not ruling out a weak September, but that appears to be unlikely right now. I am looking for mild weakness for the next few days, up to a week or two, but expect a retest of 4280 at a minimum, and probably a breakout above that in September/October. So Sept could have a trading range between 3905 and 4400 or so.
And don't you dare just lurk, with all of your insights and knowledge!!!! Post a lot here, ok?
Best wishes,
Dr.Bob |
