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Strategies & Market Trends : Tech Stock Options

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To: donald sew who wrote (32027)12/28/1997 4:58:00 PM
From: j g cordes  Read Replies (1) of 58727
 
Don and Patrick, I've best used the p/c ratio this way. Perhaps you can shed some light on why it works well sometimes.. When the p/c ratio is high (as it is now) there is a contrary move to the positive in the averages, however it is short lived... perhaps a week. After it starts to relax thats when the averages actually go in the direction of the ratio.. almost as if its a leading indicator. Have thought of doing a slower moving average of it, but never took the time.. I'd assume there might be something like a 5-9 day moa of the p/c that precedes the market average its tracking. I'd also assume that the more extreme its reading the greater its potential for volatility to "norm" the relationship.

Jim
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