AI
Tuesday, July 26, 2005 12:01:06 AM
Once is Not Enough
7/25/2005
by David Yu
A down day with low volume should be just as easily dismissed as an upday with low trading volume. The trading volume on the big board (NYSE) and NASDAQ today were about 10% lower than their respective 60-day EMA’s (Exponential Moving Average). And, the S&P volume was even lower - 13% lower than the same moving average.
Chart 1 is one of the fine market sentiment indicators that compares the S&P performance to the option traders’ Put (sell) to Call (buy) option ratio. Although option traders are not necessarily gifted with visions to see the future, they’re one of the “fastest” traders due to the leverages used in the option trading. When this index is rising, as it was in May and early June (blue price channel), it’s a sign of bullish sentiment. Even with a down day like today, this index is still staying above the 20-day simple moving average. It has been, more or less, moving sideways since mid June. This is a sign of uncertainty but not bearish, and thus could be deemed as complacency. There’s not much fear.
Chart 1
And, the market does not sell off without fear. This “no fear” sentiment could also be seen on Chart 2. Even though NASDAQ was the biggest percentage loser of all 3 major indices, the NASDAQ TRIN Index stood almost at 1. This means that there’s no particular selling pressure. The up and down volumes were in perfect accords with the advancing and declining issues. In addition, if you had looked through the charts of the major indices today, you'd see that there’s hardly any technical damages done today.
Yes, Once is Not Enough. The fear factor would not come into play until there’s a larger down day or a few more down days like this strung together. Before that, we’re still in the “Buy on the Dip” cycle.
Don’t’ go too short.
7/25/2005
by David Yu
A down day with low volume should be just as easily dismissed as an upday with low trading volume. The trading volume on the big board (NYSE) and NASDAQ today were about 10% lower than their respective 60-day EMA’s (Exponential Moving Average). And, the S&P volume was even lower - 13% lower than the same moving average.
Chart 1 is one of the fine market sentiment indicators that compares the S&P performance to the option traders’ Put (sell) to Call (buy) option ratio. Although option traders are not necessarily gifted with visions to see the future, they’re one of the “fastest” traders due to the leverages used in the option trading. When this index is rising, as it was in May and early June (blue price channel), it’s a sign of bullish sentiment. Even with a down day like today, this index is still staying above the 20-day simple moving average. It has been, more or less, moving sideways since mid June. This is a sign of uncertainty but not bearish, and thus could be deemed as complacency. There’s not much fear.
Chart 1
And, the market does not sell off without fear. This “no fear” sentiment could also be seen on Chart 2. Even though NASDAQ was the biggest percentage loser of all 3 major indices, the NASDAQ TRIN Index stood almost at 1. This means that there’s no particular selling pressure. The up and down volumes were in perfect accords with the advancing and declining issues. In addition, if you had looked through the charts of the major indices today, you'd see that there’s hardly any technical damages done today.
Yes, Once is Not Enough. The fear factor would not come into play until there’s a larger down day or a few more down days like this strung together. Before that, we’re still in the “Buy on the Dip” cycle.
Don’t’ go too short.
David
#board-3693
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