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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Terry Whitman who wrote (26761)	12/31/2001 7:29:24 PM
From: MythMan	Respond to of 52237

Congrats on rippin up the avg age 26 years old BYU tribe! -g-

To: Terry Whitman who wrote (26761)	1/1/2002 3:48:16 PM
From: isopatch	Read Replies (2) \| Respond to of 52237

P/C ratio may be giving false signals Here's an excerp from an excellent article by McMillan a few days ago. <While it is sometimes perilous to try to "over-interpret" any technical indicator – especially a sentiment indicator – a general observation can be made: someone is still buying a lot of puts (perhaps institutions and hedge funds are buying them for protection after the large rise in the market over the past three months). However, the number of dollars that they're spending for these puts is not overwhelming – hence the flat weighted ratio. Perhaps they're buying mostly out-of-the-money puts as hedges. The problem this presents is that hedging is not what we are trying to interpret from a sentiment indicator. We'd prefer to see only the speculators' actions; then it would be easy to take a contrary position. Hedging activity clouds the picture, though, and we thus need to be careful about relying too heavily on the put-call ratio when it is rising in conjunction with a rising market. The put-call ratio and the price of the underlying are supposed to move in opposite directions. When they don't (as is the current case), then the indicators lose their usefulness. This is what happened to the "normal" S&P 100 Index ($OEX) put-call ratio several years ago: it lost its usefulness after speculators left that market, with mostly hedgers remaining.> worldlyinvestor.com If his thesis is correct. What we might see is a headfake selloff early in the month followed by resumption of the Intermediate uptrend. Another indication that this sequence will be followed by the market is an increase of posted short positions on several important threads. Isopatch