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

To: Dexter Lives On who wrote (10549)	2/17/2002 5:01:49 PM
From: Steve Lee	Read Replies (1) \| Respond to of 19219

I haven't found a correlation between index PCs and market direction. That's why I suggest to ignore them. Of course, we have been declining over the long term for some time now, so we are getting closer to the bottom. PCs have been getting higher and one day the bottom will come. It could be in a few weeks or a few months or next year. I can only look a week or so ahead, and I don't think the bottom is next week. When it arrives, we will see Vix at least in 40's, VXN in 60's, a PC maybe above 2 and extreme tick. We will also see massive volume accompanied by suddenly increasing volatility. We don't have any of that at the moment.

To: Dexter Lives On who wrote (10549)	2/17/2002 8:35:28 PM
From: yard_man	Read Replies (3) \| Respond to of 19219

where can I get a daily chart of option volumes? Index and equity? Daily open interest??

To: Dexter Lives On who wrote (10549)	2/18/2002 11:46:08 AM
From: KymarFye	Read Replies (1) \| Respond to of 19219

"But haven't P/C's been persisting at high levels? It's been around 1 (on average) for at least a couple of weeks. That's a big book. I'm not building this theory around 1-2 days of data - this entire downswing has been marked by lower highs in VIX and increasing and persisting P/C ratios." I think your observations are accurate, but you might find this week's "The Striking Price" in BARRON'S of interest. As I understand the argument, Enronitis and related concerns have led to a magnification of put-buying, sort of as portfolio re-insurance, in excess even of what you might expect from the sudden downturn in sentiment. As for the VIX, which is also discussed in the BARRON'S column, expectations of a significant downshift in volatility - i.e., from Bubble-and-Crash levels - were already widespread last Summer, with the extended decline interrupted by the September events. We've also seen average daily ranges in the major indices grinding down to pre-Bubble levels, in keeping with a bull-bear stalemate, as, among other things, the reasons to distrust equities (accounting concerns, valuation concerns, geopolitical contingencies) continually run up against evidence of an improving economic picture and the lack of highly attractive alternative investment vehicles. I suspect that uncertainties and unfolding events, both financial and otherwise, may prevent this process from extending much further. In other words, I think we may have a few more "volatility events" to undergo, but I don't pretend to have any extraordinary insight into whether the relaxation into a relatively non-volatile trading range is mainly a "natural" but temporary reaction to the extreme volatility of '99 - '01 or, instead, a larger, more durable process of reversion to historical norms. Anyway, as I proposed (to no apparent effect) during the discussion of Rydex indications, I think that you have to be at least aware of the possibility that baselines might shift, either for some of the reasons mentioned above or for still other reasons. Absolute VIX and P/C levels that tended to prove critical for many years might simple cease to apply. As you probably know, depending on such measures to revert to prior norms can be a highly profitable strategy for years on end - and then suddenly become suicidal. Just ask Niederhoffer.