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Bob Carver at http://www.marketclues.net is the guy that first introduced
me to the OEX $C/$P ratio. Here is what he says about the statistics of the
unnormalized ratio tonight.
bobr
"
We are now entering the heart of the Monthly Buying Spree. Statistically,
there is a 70% chance the broad market will rise from here. And, the
extremely low Intraday Dollar-Weighted OEX Call-Put Sentiment Ratio we saw
Wednesday (only 16% of the cash traded in OEX options was traded in upside
bets--that's a huge preponderance of 84% of all trades in bets the market
will continue lower) assures us those traders will be proven wrong who bet
on a one-way slide to the downside. Remember, it was just last Friday when
those same traders were buying calls into the dip (our OEX ratio closed last
week at 1.77 on a day when the Dow fell more than a hundred points). They
were wrong then, and they are wrong now.
The strength of the rally to come will tell us a lot about whether this
correction is a simple wave 2 correction of the initial wave 1 rally, or
whether it's the start of something bigger. In the former case, which we
believe is far more likely, this correction is a great buying opportunity
for investors who have cash on the sidelines. In the latter case, however,
we will need to sell into the next rally. The next couple of days should
allow the market to tell us just where it intends to go this summer.
"
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