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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (4001)	6/5/2001 12:55:09 PM
From: John Pitera	Respond to of 33421

Interesting point from Jay Shartiss...between the huge swing up in the Percentage of stock bulls and the meltage of the VIX and VXN to low levels, it seems that we're destined to have this current rally's legs cut out from it later this week or next week. One of the most interesting observations I have come across regards the very big swing in the sentiment that the April-May rally induced. This effect was perhaps best illustrated by the "Consensus" survey which went from 10% bulls to 66% bulls in just 8 weeks. Schaeffer's Research identifies this as the largest increase in the 18 years of data analyzed. The 66% was recorded a week ago but has since dropped only a little to 62% last week. This would seem to call for a selloff of some dimension to bring back some fear. Corroborating this message is the VIX which dropped back yesterday to the lowest level touched since last October. Low VIX equals low fear. These factors plus several others, which I will get to, put me in the bearish camp now and will focus on short sales. and he also points out...... Bearish indicators this morning include a quite low Nasdaq TRIN (Arms) Index at .26. Anything under .25 is very overbought. Also, the VIX at 22.75 remains low and bearish. ....... 6/05/01 12:43 PM ET I look at the relationship of out-of-the-money OEX puts and calls. With the OEX at 660, the June 635 put is priced at $1.65 bid. That's 25 points down from 660 and 25 points up from the current 660 level reveals the June 685 call at $1 bid. I rate this as bearish as I have found as a general rule when the call is priced at more than half the put price, a market top is often near. In very rare instances have I seen the call priced above the put but I wouldn't expect that now.