Channeling Stocks

[sludgehound]

PCR chart vs S&P - article

Great charts showing Put Call Ratio inverse to S&P up
until recently and how it PCR went flat line.
Longish article so first do fast scan at the 3 charts
just to see how PCR extremes did catch TURNS in S&P.

CBOE.com has the current data in this June article.

http://www.zealllc.com/2003/pcr2.htm

While only time will tell if the PCR 21dma has shattered and is no longer useful, which I am certain is not the case, or whether a new bull market was born in March, which is incredibly doubtful in light of today’s stellar overvaluations, I still have faith in this indicator in light of its long and distinguished track record before March 21st.

Short-term market movements will always be primarily driven by greed and fear warring within the hearts of speculators. These speculators often prefer to make their leveraged bets with put options and call options, so the ratio of these two grand classes of derivatives ought to continue to be highly valuable for contrarian speculators to monitor as they seek to bet against the majority of other speculators and hedgers.

When the PCR 21dma is vindicated in the coming months, it will soar as stocks plunge. As it tracks its bottom trendline today exposing extreme greed and complacency, the PCR 21dma continues to call for a major fall in the stock markets as it seeks to redeem itself as an elite sentiment indicator.

Adam Hamilton, CPA

June 13, 2003