Trader’s Narrative

Oil has corrected sharply. And so have the majority of commodity markets. But in contrast to the financial sector which has the news in a headlock, the energy sector is not only being mostly ignored, it actually presents exhaustive selling and is setting up a pattern which has seen it bounce higher.
This is a chart […]

The 3 month Treasury Bill rate is an important fixed income security that I keep track of, not because I trade it but because it is a remarkably accurate gauge of panic in the equities markets. It is also very prescient in leading rate changes by the Federal Reserve board.
Thanks to its predictive qualities, I […]

Monday’s jarring market woke everyone up from the snooze fest we’ve had to endure recently. The 500+ point drop reminded those who were around then, of the 1987 crash. But of course, there was a world of difference between the two Mondays. Today’s bounce is, believe it or not, the normal thing for the market […]

Today’s market notwithstanding, the financial sector has started to lead the general market once again.
Here is a chart of the Philadelphia Banking Index (BKX) alongside the S&P 500 Index (SPX):

The de-coupling started just recently but it is unmistakeable. Here is another way of looking at the relationship between the indices:

The change has just started and […]

The neutral and meandering sentiment landscape continues…
CBOE Put Call Options
Let’s start with the one sentiment indicator which showed some form of conviction this past week: the CBOE equity only put call ratio. Last Tuesday, it almost reached the coveted 1.0 level:

Although it came a hair short (0.99) it still approached extreme levels which have denoted […]