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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 690.27

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Dec 26 4:00 PM EST

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To: Les H who wrote (71081)	3/3/2001 3:55:29 PM
From: brunn	Read Replies (1) of 99985

re Market sentiment erlanger2000.com The expected inverted relationship between put/call and short index versus the index price is not seen in the graphs. In fact, it appears that the opposite is true--the put/call ratio peaking just before the NDX peak in January 2000 and being in a downtrend ever since. The short index peaked in the end of 1999-beginning of 2000. Since then, it has been in a general downtrend. My understanding is that these measurements are supposed to be contrary indicators and that a high short index and high put/call indicate extreme bearishness and occur at bottoms. Instead, the graphs show that they peaked close to the top of the market bubble. After the graphs they state "TOO MUCH CALL BUYING." However, call buying bottomed in February 2000 and steadily rose since. I would rather be buying now than a year ago--despite these sentiment statistics. Finally, CBOE put/call statistics contradict the statistics in the graphs, with put/call peaking in December 2000.

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