September 5, 2006
S&P 500 Should Pass May High Given Bearish Sentiment
The last six weeks the ISE Sentiment Index has shown a disproportionate number of puts being bought even as the market rises. Since folks are expecting the market to fall, I’m pretty confident the S&P will move above the high reached last May.
See also: I’m Thrilled: Sentiment at Worst Levels Since March 2003 (June 18, 2006) [Try to find a mainstream, or alternative, financial publication that was “thrilled” on June 18.]
Cat: | Time: 10:12 am (utc+8)
September 5th, 2006 at 4:15 pm
With all respect -
1. Don’t you feel that the put/call ratio is an inefective judge of market sentiment given the level of activity that hedgehogs(tm) have in index options?
2. Is volume or open interest used in the calculation of your p/c ratio? If it’s open interest then are the “market makers” included as OI? If volume is used rather than OI then wouldn’t a low Vix/high p/c ratio be indicating high levels of options writing by the public?
btw - Great job with the site I read it daily.
BV
September 5th, 2006 at 5:06 pm
Brandon: The ISEE Put/Call ratio is very special: “The ISEE only measures opening long customer transactions on ISE. Transactions made by market makers and firms are not included in ISEE because they are not considered representative of market sentiment due to the often specialized nature of those transactions.”
September 5th, 2006 at 6:29 pm
Featured on BuzzTracker…
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September 5th, 2006 at 7:38 pm
to me, this looks like a perfect place to put in a double top on the daily chart…lets see
September 5th, 2006 at 9:27 pm
[…] …at least that’s what Chairman Mao opines. The last six weeks the ISE Sentiment Index has shown a disproportionate number of puts being bought even as the market rises. Since folks are expecting the market to fall, I’m pretty confident the S&P will move above the high reached last May. I like his track record, however according to Maximum Pain - A theory that presumes most options will expire worthless - the S&P should fall short of the May highs this month. […]
September 5th, 2006 at 11:03 pm
Peter: It could double top, especially given the sorry state of the VIX.
September 5th, 2006 at 11:17 pm
[…] S&P 500 Should Pass May High Given Bearish Sentiment | Home […]
September 6th, 2006 at 5:22 pm
MaoXian,
its funny…ive been reading through your valueable “Trading for Dummies” section the other day and i found this:
“The trouble that some folks have is that they’re always thinking in terms of “2B tops” and worried about getting trapped or picked off, which makes them unable to enter strongly trending markets.”
hehehe…btw, this section is worth a hundred so called trading books (all saying: i can tell you how to trade…[but i cant tell you how to make money trading])…just one question: dont you need a special momentum type of environment to make it work in a great way ?
September 6th, 2006 at 5:39 pm
Peter: Yeah, the Dummy trades work best on “Unusual Suspects,” meaning stocks that are unusually volatile and active, i.e. movers & shakers.
September 6th, 2006 at 8:38 pm
What do you think about this sep-october statistic?
September 6th, 2006 at 11:08 pm
marco: I think the past ain’t prologue.
September 18th, 2006 at 10:58 am
[…] On September 5th I wrote that the “S&P 500 Should Pass May High Given Bearish Sentiment,” and I’m still pretty sure it’s going to happen despite the mixed market sentiment. […]
September 27th, 2006 at 9:58 am
[…] Kind of a crummy, choppy day though look at who is the number one Notable New High — yes, it finally passed the May high. […]