IPPs and Merchant Energy Co.s Message Board

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Strategies & Market Trends : IPPs and Merchant Energy Co.s

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To: Jerome who wrote (3035)	1/8/2004 9:00:38 PM
From: Bread Upon The Water	Read Replies (1) of 3358

Jerome, You need to ascertain additional information. You need to know the ratio of calls to puts AND the # of short shares borrowed. When you have that information you will be better able to answer the upward or downward pressure question. A put ratio that is better than 50% of the outstanding calls is said to be bullish---the nearer to a 1 to 1 basis of puts to calls the more bullish that it is. The theory is that is in indication of people out of the stock who might change their opinion and provide fuel for a rally if the price moves against their put position. he ratio has to be read in the context of what else is going on with the company. If there are recent positive developments along with a high put to call ratio this is a very positive sign for the stock--at least according to Bernie Schaeffer who pioneered the theory of expectational anaylsis (www.schaeffer.com)(I think). Additonally, if there is more outstanding shares borrowed than it would take 5 days to liquidate at the average trading volume this too is bullish. The idea being that the shorts would have to buy back their borrowed shares as the price moves against them providing more fuel for a rally.

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