To: Casaubon who wrote (60122 ) 10/8/2000 11:56:23 AM From: KymarFye Read Replies (1) | Respond to I've also been wondering about the utility of the P/C ratio when it comes under the kind of scrutiny that its been receiving, though I remain dubious, as ever, of attempts to read conspiracy and manipulation into the situation. I mean, I'd find it easier to believe that put-buyers themselves have begun to grow more sophisticated (and to watch the ratio themselves), and to trade in and out of the options more speedily than they may once have done, than to believe that SOMEONE would undertake the rather expensive tactic of buying or writing a sufficient number of calls or puts for no reason other than to skew the readings. Overall, I'll be curious to see how the ratio plays out in this context - does it need to reach a year high, a multi-year high, a cumulative high rather than a one-day spike, or is it beginning to lose contrarian dependability? The ratio's been rising since the beginning of the month, which looks like a good call (or put). As for odd lot short sales, according to IBD they actually declined over most of last week, but I'm not sure how much that tells us in any case. They spiked on Sept. 8, just prior to two more days of declines, and much nearer the beginning than the end of the larger down move. Did the odd-lotters get things dead on - or close to it anyway? Isn't that supposed to be impossible? Though IBD still religiously prints the #s, other observers have long argued that the indicator has lost its utility, in part because of the growing popularity of puts. The Investment Advisors numbers are finally beginning to move in the "right" direction, but they're still far from where historically contrarians would want to see them, and I wonder if this indicator may also have begun to outlive its utility. Bearishnes increased somewhat at the end of August and Bullishness decreased: The numbers still had the Advisors mostly wrong (so far), as they're supposed to be, at least from a short-term perspective, but the direction of the movement turned out to be right. Maybe if things get REALLY hairy, some or all of the old indicators will come into line with some extreme point of mob negativity that we're still to reach, and I'd be glad to be enlightened by someone who might be able to read them better than I can, but to me their messages are looking muddled at best.
