Newvision, Larry Mcmillan's use of the moving averages of put/call ratios beautifully follows the trend of the markets and keeps you from defining some certain level of bullish or bearish sentiment as a top or a bottom.
They way he explains it is that the trend goes until the last call buyer who wanted to buy a call buys or the last put buyer who wanted to buy a put buys, then the trend reverses.
stockcharts.com[w,a]daclyymy[pb10!b21][vc60][iUb5!La12,26,9]
look at the 21 dma topped in april turned down, went sideways during the trading range of june and then turned down into the september low, that registered a pretty extreme reading, then a buy signal was issued when the 10dma crossed the 21dma in early october,
and both moving averages are still trending down and are around .7, during the bear market this could be a topping range, but he is saying not to anticipate the sell signal, because during the latter portions of the move can be large.
also he is using the breakout to new rally highs as another test, if we hold the breakout on a pullback thats bullish, if not the breakout could be a bull trap. |
