Stock Market:
optionstrategist.com
Sentiment figures continue to get more and more pessimistic. Put buying is rampant in stock options. As a result, the various equity-only put-call measures are climbing to levels last seen at the April, 2000, bottom or at the bottoms of the past couple Octobers. Most certainly, a good buy signal lies in the fairly near future. In fact, late last week the put-call ratios had rolled over to buys, but then the ratios all went higher this week negating those previous buy signals and requirement a new setup for another buy signal. Specifically, the "normal" equity-only put-call ratio has risen to a very high level, but doesn't seem to be showing any real signs of tapering off yet. The weighted" put-call ratio is climbing to high levels as well, as is the NASD ratio that calculate by using the option data from all stocks with at least 4 characters in their symbols. The S&P 500 futures options weighted ratio remains on a strong sell signal, as does the NASDAQ-100 ($NDX) weighted ratio.
Meanwhile, our oscillator is beginning to lose ground. It stands at about -146 as of Thursday's close. Breadth hasn't been bad lately, but it hasn't been good, either. So the oscillator continues to erode a little each day. If it drops below -200, that would negate its recent buy signal.
In summary, we are tentatively long right now, but are prepared to jettison those longs if the oscillator falls below -200. Should that happen, we might even consider going short because it might take a more severe selloff before the absolute bottom is reached. On a more positive note, looking out a few days or week, we are looking at a potentially bullish situation when the equity-only put-call ratios make a turn for the better. Just don't get too long too early it can be dangerous. |
