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

To: Les H who wrote (52898)	6/2/2000 2:19:00 PM
From: Les H	Respond to of 99985

Market breadth has helped keep our oscillator on its buy signal -- although last week it came very close to canceling out the buy. That happened when it fell to minus 193 last Thursday. Things have improved greatly since, and the oscillator stands at approximately +129 today. This is good position. It won't become overbought until it rises above +200. Even if that happened, a sell signal wouldn't occur until it rose above +200 and subsequently fell below +180. So this indicator remains bullish. The equity-only put-call ratio is another matter. While it remains at high (oversold) levels on its chart, the 21-day moving average reversed upward this week. That means the previous buy signal is 'canceled' and perhaps one could even worry about a sell signal. As long as prices hold up, we will not take a bearish attitude because of this development in the equity-only put-call ratios, but if $OEX fell below 750 we'd become a lot more concerned. For now, that hasn't happened and so we are holding onto bullish $OEX positions. At times such as these, when the TOTAL equity-only put-call ratio seems to be wavering, it is apropos to look at the breakdowns. The NASD put-call ratio is actually more bullish than the total right now, and consequently the NYSE equity-only put-call ratio is worse (in fact, the NYSE ratio has gone to new highs -- an all-out sell signal, modulo price movements). Finally, the WEIGHTED equity-only put-call ratio, which was the subject of the feature article in our semi-monthly publication The Option Strategist last week, is bumping up against all-time highs as well. Thus, it's oversold, but not on a buy signal. Meanwhile, volatility measures ($VIX and QQQ implied volatility) are drifting lower, which is bullish. In summary, then, things are bullish for now, but with the equity- only put-call ratios being reluctant to establish declining patterns, one should be on alert to cancel out buy signals if prices break support (750 on $OEX or 1400 on $SPX). optionstrategist.com