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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (8287)11/27/2001 12:50:52 PM
From: orkrious  Read Replies (1) of 99280
 
Zeev, thoughts on this? The guy writes for TSCM.

Jay Shartsis
PUT/CALL RATIOS
11/27/01 12:20 PM ET
Here are some specifics in the put/call complex that should be considered now. Perhaps the most commonly used put/call ratio for the broad market is the volume based equity ratio which simply compares total call volume to total put volume. Much less well known is the "dollar-weighted" put/call ratio (and harder to access, only me and 2 other very high priests know how to get it). I haven't seen any studies that tested its historical accuracy against the volume based ratio but in my experience it is the better. Actually when the volume based and dollar-weighted are both speaking in concert, all the sronger signal. Presently the "dollar-weighted" equity put/call ratio is running near .75 on a 21 day moving average. This is the lowest and most bearish reading since the .70 recorded in September 2000, right before a big market retreat. That's 70 cents in puts traded for every $1.00 in calls.

At the two prior tops of signifiance seen this year this ratio was at about $1.00 in February and about .98 in May. The current .75 is therefore to be respected and is a big reason for my defensive stance here. The traditional volume based equity put/call ratio is now just above the level seen in May and February of this year, so it is not as bearish as the dollar-weighted ratio, but its getting there
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