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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: W. Clinton Terry who wrote (12341)	12/27/1997 10:19:00 AM
From: William H Huebl	Read Replies (1) \| Respond to of 94695

Barron's Based Forecast for next week, Clinton, Again, it LOOKS like another down week... but the NYSE odd-lot short sales were NOT available and I had to use the NAZ info which is not as "reliable" as the NYSE IMHO. Further compounding the problem is that VIX is on a buy which give us the possibility of more strong volatility... so what is new, right? To answer your question: - 1,800,861/532,544 is about 3:1 or 1:3 if you flip it. (That was LAST week... this week it is 1:10 which is VERY bearish, to my mind. The OI also is over 1:10 which is a concern... but it has been as high as 1:20) Now don't go bananas just because you have an indicator that seems to work now and again... the BIGGEST danger is falling in love with this crap, and then you REALLY are in trouble. So use it as another sign in a whole "gestalt" (I THINK I am using that word correctly) of information. So IMHO we will test the lows this coming week and (HOPEFULLY) I will make my $$ on USS puts... BWDIK? Bill

To: W. Clinton Terry who wrote (12341)	12/27/1997 1:20:00 PM
From: kas1	Read Replies (1) \| Respond to of 94695

WCT, Don't put too much faith in put-call ratios. A great many index (and to a lesser degree, equity) options are bought by pros to neutralize long/short positions of futures or actuals. FYI. BTW, where in FL are you? I wasted away some of my youth in the Ft Lauderdale - Pompano Beach area.

To: W. Clinton Terry who wrote (12341)	12/27/1997 2:34:00 PM
From: Jack Clarke	Read Replies (2) \| Respond to of 94695

Clinton: Yes, as I understand it the P/C ratio isn't the great contrarian indicator it used to be. Also, so many money managers and institutions who feel it necessary to be nearly 100% long in equities are holding OTM (out of the money) index puts as "insurance" against a market decline. Two weeks ago (I think) Barrons had an excellent article by Andrew Smithers about the danger of using options as insurance. It may not work or even fail miserably if everybody wants to cash in on them at the same time. Remember "portfolio insurance" with S&P futures in '87? These had the effect of worsening the decline. Smithers went into great detail about the mechanisms involved, and I heartily recommend your digging up the article if you can. Basically, if everybody's house burns down at once, the fire insurance won't be enought to pay off all the subscribers. Jack