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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Shack who wrote (32068)	2/22/2002 2:30:53 AM
From: Challo Jeregy	Read Replies (1) \| Respond to of 99280

from a site I read - Thursday, February 21st I have read quite a few reasons as to why the market took a dive Thursday afternoon. Some said that the weakness in the Nasdaq was too much for blue chips to overcome, which is certainly true to a certain extent. Most said it was either due to accounting fears, terrorism fears or earnings fears, all of which I think are wrong. What no one said, or probably even knew, was that there was some massive institutional trading in Dow Industrials (DJX) options on Thursday that smacks of market manipulation. Pull up today's intraday put/call data for the DJX (Dow Industrials) and notice that the put/call ratio jumped up to an unbelievably high 31.66 at 12:30pm ET. This was due to a massive amount of put volume (roughly 60,000 contracts) that hit the DJX pit between 11:30 and 12:30pm ET. If you're familiar with our Tells, you know that a DJX ratio over 5.0 on an up day in the Dow forecasts a lower close (below the signal day) within the next three sessions over 90% of the time. A DJX put/call ratio over 20 is completely off the charts. Since we began tracking this data back in January '99, there has only been one day in which a reading over 20 was recorded, highlighting how unusual today's action was. More importantly, notice that at the end of the day, after the stock market close, a whopping trade for 50,000 calls hit the DJX pit, taking the put/call ratio all the way back to an ordinary 1.61 reading at the close. If you hadn't checked the intraday data, you never would have known that whatever institution initiated this trade most likely caused this afternoon's meltdown. The fact that the same institution spread out the put side with a similar amount of calls right at the end of the day suggests this afternoon's meltdown could be only temporary in nature. Don't get me wrong - I continue to see many more bearish signs than bullish ones on a longer-term basis - notice I still haven't been able to add one single indicator to the 'Bullish Signs' summary at the end of my column. But I think today's selloff had a lot to do with that unusual options activity and little to do with anything fundamental. I'll have more on this activity in my weekend column.