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Here's another one, just for tomorrow though since the odds get harder to
deal with further out. Probability Sympathizer says odds are for a downer.
$C/$P reached what is normally considered bearish, but Bob Carver at
w.marketclues.net is taking a different perspective. Fact is that ratio is
not going to stay at 3.74 very long and will deflate on Friday and Monday
from this traders experience.
"
A day of digestion followed Wednesday's huge feast in stocks. The smart
minority of options traders in the OEX options pit were obviously taking
profits, as the 3.74 ratio on our Intraday Dollar-Weighted OEX Call-Put
Sentiment Ratio testifies. That high a ratio would be somewhat worrisome
except for the fact that profit-taking on call options which ballooned in
value enormously on this week's rally probably accounts for this abnormally
high preponderance of money transacted in call options. Those eager buyers
of calls are very likely naked option short sellers who are buying to stop
the blood flow out of their trading accounts.
Be that as it may, high call-put ratios right after a rally are not
necessarily immediately bearish. And, this period of digestion is needed
before the uptrend gets re-established. The first leg up typically is
retraced by half and this one may be more normal than most think.
"
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