I bought some longs at 1193.5 but I am refraining from entering the bulk of my position this high since there is a holiday ahead of us and the markets are closed.
I expect to get a better chance to add to my longs on Monday. Here is how I think the following two trading days will roughly unfold, with the big green candle representing today:
The intraday reading of the put/call ratio (courtesy of StockCharts.com) points to increased bearishness even after today's rally:
5 comments:
Adi
There is something very strange today with the CBOE put call ratio.
The spike from 0.84 to 1.20 may mean there's a big player acquiring a large amount of puts.
I would be careful here.
Anon,
This interpretation can be valid but since everything points upwards I will not overanalyze.
I can think of other cases when the ratio behaved the same and the rally just kept on going. For example, take a look at the action at the beginning of September.
May I suggest you use CPCE rather than CPC. CPC is skewed by index put which are often used by big players to hedge their long portfolio. A much better measure of retail's greed or fear would have been CPCE. An even better one, IMHO, would have been ISE all equities index (http://www.ise.com/WebForm/viewPage.aspx?categoryId=126) as this gives you the number calculated as call/put*100 (not put call) that is driven purely by retail accounts.
CSW,
Thanks for the suggestion.
The main issue I have with using CPCE or ISE data instead of CPC is that they are not complete. If indeed CPC reflects more big players' activity, then I need to see that too. Big players are also human and they are often wrong, especially short term.
I am just concerned that that CPCE/ISE numbers are still showing relatively bullish behaviour by retail accounts (CPCE less than 1) whereas institutions/hedge funds are actively hedging their long positions (CPCI larger 1). Normally at key market turns, the retail investors are wrongly positioned and the big boys are correctly positioned. That of course assumes that the market is turning.
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