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Strategies & Market Trends : Stock Attack II - A Complete Analysis
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To: Chris who started this subject1/12/2002 8:31:18 PM
From: Secret_Agent_Man   of 52237
 
OEX PUT/CALL RATIO INVERSIONS

One of those peculiar inversions is now in progress on the
10-DMA of the OEX Put/Call Ratio, and it is a good
indication that a decent decline is in store. Normally, high
readings on the Put/Call Ratio signal a bottom, and this is a
reliable rule for the CBOE Total and CBOE Equity Put/Call
Ratios because high put volume relative to call volume
generally means people are getting too bearish; however,
the OEX Put/Call Ratio occasionally behaves in just the
opposite manner and starts running an inverted pattern
compared to the CBOE and Equity P/C Ratios. Such is the
case now.

What does it mean? To me it can only mean one thing, that
smart money is buying puts in preparation for a decline. A
lot of Equity and Total put volume represent individual bets
against stocks. OEX puts can be used by individuals, but
they can also be used by big money players to hedge
portfolios and short the index. When I see large participation
in put buying that is running counter to equity put buying,
like now, I attribute it to the big guys.

If you look at the chart, you will see that the subsequent
decline can be large or small, but odds are very high that
there will be a tradable top when the OEX Put/Call Ratio
reaches present levels.

--Carl Swenlin

decisionpoint.com
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