John,
Here is a post from Tim Ord (over at Crystal Ball)
Susan
Category: TA
From: timord (tim ord)
To: ALL
Date Posted: September 17, 2001 at 12:36:53
Subject: Selling Climax
This is the commentary we sent out last Friday, "We said on Tuesday’s (9-11) update, “A bullish Wyckoff move called a “Spring” was triggered yesterday, triggering us in on the long side on the S&P. If the recent lows do not hold, than a Bullish “Selling Climax” may occur next. A “Selling Climax” is a big down move with huge volume ending the down move in a climatic way. If a “Selling Climax” does occur over the near term, it will mark the end of the decline at least from the May 22, 2001 high if not the end of the decline off of the March 22, 2000 high. Either way, a strong rally will ensue after a “Selling Climax” is completed.” To end this decline a “Selling Climax” has to occur. Either it happens now or a little later. To gauge a “Selling Climax” is occurring, the VIX will exceed 40 and possible reach 60 and could even go higher. The intraday ARMS will exceed 4.00 and the “5 day ARMS” will reach near 10 or higher. The downtick readings will approach or exceed 1200. The volume will be huge, reaching 2 billion or more. The “CBOE total put call ratio” will exceed 1.06 and close near the high of the day. Usually a very large bullish candlestick pattern will form on the day of the low that coincides with a bullish downtick reading. If the statistics above materialize, than that will mark the pinnacle of the decline, and the market will start a strong rally. I don’t know what will happen Monday. Either the bullish “Spring” holds and the market bounces and delays the “Selling Climax” or that it heads into a “Selling Climax” now and ends the bear market. Either way the market is not far from a bull market starting. America will endure “one nation under God with liberty and justice for all”. The only end in sight is this bear market."
So far we have the extreme downtick reading near 1200, and the high VIX reading over 40 and the volume will be huge today exceeding 2 billion along with the "CBOE total put call ratio" exceeding 1.06. Therefore the "Selling Climax" is happening now. It could last one more day. Times like the present (statistics wise) are rare. After the "Selling Climax" a re-test is likely and that would be the time to look at call options.
all the Best.
Tim Ord
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