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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: J.T. who started this subject	9/11/2001 12:57:36 AM
From: High Country Trader	Read Replies (3) of 19219

Response on VIX to Where'd He Go and Bullish % index to John. Looks like LaVerne presented a nice study on VIX in his post below. You might want to check www.schaeffersresearch.com as Mr. Schaeffer has a great article just today on the volatility indexes. There is also a good article on the same topic (but totally different conclusions from Schaeffer) in this week's Barron's. As much as I'm into sentiment, the volatility indexes were never on my radar screen until the past year, so can't offer much. As for Bullish %(I'm assuming you mean from the Consensus poll) last week's number at 32% was actually a rise from the previous week. Will be most interested to see if this gets closer to 20% after last week's plunge. 20% and below seems to be the magic number for rallies. As for the put/call ratios, one of my favorite patterns had been to expect a larger than average rise on triple witch expiration week if the preceding week had seen higher than normal CBOE index put buying. Better still if it had been the previous two weeks. Well, this pattern failed miserably at the June triple witch week. Next week is triple witch again and the put buying has definitely been heavy the past several days. So we are setting up again for historically what should a strong triple witch week. Then again, the index put/call ratios have never seen this type of bear market and most of the rules for overbought/oversold were based on bull market action. To quote analyst John Bollinger, "what's scary is what's worked in the past doesn't seem to be working now - the market hasn't responded despite numerous positive technical set-ups....we're really in an environment that's unfamilar - it's unfamilar in a most profound manner... There is genuinely something different about this market." My take on the above is besides the obvious fact we are in a bear (Nasdaq)of epic proportions, another reason I think for things not working as before is because (of the Net, the financial news networks, and the information revolution) everything is known by everyone at the same time. I mean how many times have we heard about the trin and its bullish implications the past several weeks. How many times have we heard all about the bullish implications of the rate cuts and how the market responded in the past to rate cut #1, #2 and so on? In the past, we might occassionally hear about this stuff in the print media and days or weeks after the fact. Not sure if this makes much sense but when historically infallable indicators and can't miss patterns become common knowledge, they seem to suddenly quit working. As for sentiment, I would say the one sentiment indicator that gets the most press are the put/call ratios. So beware. The ones you rarely read about are the ones like the info in the NYSE Members Report.

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