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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: High Country Trader who wrote (8503)9/11/2001 1:09:00 AM
From: bobby beara  Read Replies (1) | Respond to of 19219
 
Not sure if this makes much sense but when historically infallable indicators and can't miss patterns become common knowledge, they seem to suddenly quit working. >>>

larry mcmillan talks about this in one of his books, the put/call averages made regular buy and sell signals at certain levels in the late 70's early 80's, then they stopped working at those levels, most market mavens proclaimed put/call ratios as no longer useful.

the problem is that the levels change in changing market conditions, mcmillan long ago started using moving average cross-overs of put-call averages for buy and sell signals, rather than using raw #'s to call overbot and oversold.



To: High Country Trader who wrote (8503)9/11/2001 2:21:33 AM
From: J.T.  Read Replies (1) | Respond to of 19219
 
As for the put/call ratios, one of my favorite patterns had been to expect a larger than average rise on triple witch expiration week if the preceding week had seen higher than normal CBOE index put buying. Better still if it had been the previous two weeks. Well, this pattern failed miserably at the June triple witch week. Next week is triple witch again and the put buying has definitely been heavy the past several days. So we are setting up again for historically what should a strong triple witch week. Then again, the index put/call ratios have never seen this type of bear market and most of the rules for overbought/oversold were based on bull market action

Gary- It may have failed in June, but the put volume has been bought with much more conviction since mid august as compared to activity in june and prior months. Typically, you see the CBOE Equity Index P/C ratio taper off into last four 1/2 hour snapshots into the bell below 1 down around .90 and this has not happened of late. A comparison of different market selloffs and corresponding P/C Ratios in the last year and compare to today which is no sell-off at all:

Equity/ Index/ Total Put Call Ratio Half Hourly CBOE Exchange Report 

         10/11/2000    03/14/2001   03/15/2001   09/10/2001

Time
        
9:00  AM    1.42         1.16         0.81        1.49
9:30  AM    1.09         1.11         0.89        1.58
10:00 AM    1.13         1.07         0.91        1.35
10:30 AM    1.09         1.02         0.81        1.29
11:00 AM    1.11         1.00         0.87        1.14
11:30 AM    1.05         0.99         0.89        1.10
12:00 PM    1.02         0.99         0.91        1.05
12:30 PM    0.99         0.99         0.91        1.12
1:00  PM    0.96         0.97         0.96        1.04
1:30  PM    0.95         0.95         0.95        1.05
2:00  PM    0.95         0.92         0.96        1.04 
2:30  PM    0.93         0.89         0.95        1.03
3:00  PM    0.91         0.90         0.96        1.01


Bottom line: I am hoping for the market to sh!t the bed in one of the next two trading days and reinforce the Bears conviction to buy even more puts in reckless orgy. I will be buying September calls pennies and nickels on the dollar that day if P/C ratios can repeat the kind of day we had today. I don't think it will be a June failed repeat but the potential for a huge melt-up squeeze play.

Best Regards, J.T.



To: High Country Trader who wrote (8503)10/6/2001 9:31:29 PM
From: SnowShredder  Read Replies (1) | Respond to of 19219
 
Hi Gary,

Do you have any thoughts on the recent Put/Call Ratios? As the Index PC ratios have been high...eg Friday it closed ~2.34. Compared to the Equity Put/Call Ratio which doesn't show too much fear, although Friday closed @ 0.81...with the Total PC closing @ 0.96. Should one pay more attention to the Index PC ratio over the Equity PC ratio, the opposite, or the total pc ratio? In that, is there an order of higher correlation between the different PC ratios and the market, that we should pay attention to? Thanks.

Best of Luck,

WHG?


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