from street insight
Mirror Monitor
05/09/03 03:54 PM EDT The S&P 100 mirror-image indicator is flashing bearish.
As we prepare for another option expiry next week, let's revisit the S&P 100(OEX) mirror-image indicator for its opinion on where the markets headed. Because we're transitioning focus from the May series to June, let's look at both.
With the OEX at roughly 470, the May 460 put bids 2.10 while its mirror-image call, the May 480, is bidding 1.25. On to June, we find the June 420 put at 1.80 bid and its counterpart call, the June 520 at 0.45 bid.
With the 1.75 to 1 ratio for May and 4-to-1 ratio for June, I rate this bearishly.
Eyeing Open Interest on OEX Calls and Puts
05/09/03 03:29 PM EDT Score another technical point for the bears.
There is a little-known indicator that compares the open interest of the OEX (S&P 100) calls to puts. Prechter used to feature it in his work occasionally, calling it the "PAL" ratio, but I haven't seen it in a long while.
It seems that important market tops have taken place when that ratio is at the 1.5 level or higher. It seems that traders sell lots of puts naked when they are bullish, as they expect them to expire worthless. They are apparently doing so now, putting the ratio back over 1.5.
This is, of course, contrarily bearish. Presently Tom McClellan points out that the ratio is at its highest and most bearish level since January 2000. |
