Date: Wed Apr 19 2006 10:09
trotsky (@pm sentiment update) ID#248269:
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sentiment on pm stocks continues to be characterized by skepticism.
the XAU p/c OI ratio has hit a new interim high of 1.26 yesterday ( 126 puts open for every 100 calls in the 3 front months ) .
the individual issues cumulative p/c OI remains at 0.59, which is currently higher than 88% of all readings over the past year ( this percentage adjusts even when the ratio remains the same, as the year keeps moving forward a day at a time ) . what's remarkable about this is that speculators have failed to add fresh calls for more than 2 weeks now.
the Rydex pm fund, which recently has seen accelerating ( if still tepid ) inflows, has suffered OUTflows again yesterday ( -$6.84 m. ) .
in summary, the so-called 'wall of worry' appears perfectly intact at this point in time. this is naturally a bullish indication.
a word of warning: indicators such as p/c OI convey more information during corrections than during uninterrupted up-moves. however, we can still state that speculative enthusiasm remains remarkably subdued.
also, Wall Street analysts remain totally indifferent toward what is now the best performing sector of the entire market this year. currently, only THREE sectors have lower cumulative analyst ratings than the pm stocks, namely, telecoms, disk-drive makers and autos ( autos are dead last due to the well-publicized troubles at GM ) . note that apart from autos, the other two sectors with comparatively low analyst ratings are ALSO putting in a scorching performance of late.
with so many 'hold' and 'sell' ratings on the pm stocks, there is ample room for upgrades ( remember the oil stocks - Wall Street hopped on the bandwagon AFTER the XOI had risen more than 100% - it then climbed by another 50% in reaction to the upgrades. )
lastly, money flows have turned slightly negative during the past week or so - however, this may well be related to the upcoming options expiration, so we'll have to wait and see how they look after the expiration.
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