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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Softechie who wrote (49436)	5/5/2000 9:12:00 AM
From: Les H	Respond to of 99985

Options: The indicators that we follow have not changed much over the past week, despite what seems to be a noticeable deterioration in the stock prices. The equity-only put-call ratio continues to move higher as put buying is heavy, at least on average. The 21-day moving average has now reached the 50 level, and that is getting near areas which have generated good buy signals in the past. Don't anticipate it, though. The truth of the matter is that the equity-only put-call ratio REMAINS ON A SELL SIGNAL. Our oscillator moved up to +154 last Monday, which was the highest reading in a year. Unfortunately, since then breadth has worsened substantially, and the oscillator is now back to a reading of about -5 (very neutral). This means that the oscillator is still on its buy signal from April 18th. Finally, there are the volatility indicators: the CBOE's Volatility Index ($VIX) today registered its highest values since the "mini-crash" of three weeks ago, representing the fear among traders in the big-cap stocks. A peak by this index would be a short-term buy signal; as a gauge, if $VIX falls below 33.50, one could expect a rally. The QQQ's implied volatility, which is more representative of the NASDAQ and high-tech sectors, has NOT spiked up this week; it is well below its levels of the "mini-crash" day of April 14th. Hence, there is NO increase in fear amongst NASDAQ traders. This may partially be due to the fact that NASDAQ had a strong performance for four days recently, and that rally alleviated a lot of anxiety in the NASDAQ market. Overall, these indicators are painting a picture of a market that is still in the throes of a sell signal, but which may not be too far from the type of sentiment extremes that will turn it over to a buy. optionstrategist.com