Comments on: Number Of S&P 500 Highs vs. Lows Suggests Caution http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html Freshly squeezed market commentary & analysis Sun, 08 Nov 2009 04:07:48 +0000 http://wordpress.org/?v=2.0.2 by: Bisco http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-33122 Wed, 14 May 2008 14:02:54 +0000 http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-33122 Hi Babak, You are still doing incredible work here, keep it up! I had a question about how you'd allocate your capital with a setup like the one we are in now. If I look back to 2003 I see that coming off a big bear market this indicator managed to stay overbought for a very long time. Currently we are coming off only a 20% correction, so I would not expect the indicator to stay overbought for the same amount of time but I certainly wouldn't be using this as an opportunity to short just because it looks a little overbought. Do you use these opportunities to trim your long exposure or do you try to time small corrections during by going short? Hi Babak,

You are still doing incredible work here, keep it up! I had a question about how you’d allocate your capital with a setup like the one we are in now. If I look back to 2003 I see that coming off a big bear market this indicator managed to stay overbought for a very long time. Currently we are coming off only a 20% correction, so I would not expect the indicator to stay overbought for the same amount of time but I certainly wouldn’t be using this as an opportunity to short just because it looks a little overbought. Do you use these opportunities to trim your long exposure or do you try to time small corrections during by going short?

]]> by: Babak http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32985 Wed, 07 May 2008 18:10:16 +0000 http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32985 Russ, thanks for the compliments. What you suggest sounds intriguing. I would pass it by <a href="http://vixandmore.blogspot.com/" rel="nofollow">Bill since he is the volatility expert</a>. Angelo, yes low volume is somewhat problematic. I'm not sure what you mean by "63% put jump"? is this related to the CBOE put/call ratio? Melinda, it all depends on your approach and how granular you want to be. The fractal nature of the market means we can zoom into very short time frames. As I've written several times already, my take is that the market has bounced back from a correction and is now facing some indigestion as it sits at or below resistance. In the short term we are probably facing turbulence but in the long term I think there are enough catalysts to push us higher. Russ, thanks for the compliments. What you suggest sounds intriguing. I would pass it by Bill since he is the volatility expert.

Angelo, yes low volume is somewhat problematic. I’m not sure what you mean by “63% put jump”? is this related to the CBOE put/call ratio?

Melinda, it all depends on your approach and how granular you want to be. The fractal nature of the market means we can zoom into very short time frames. As I’ve written several times already, my take is that the market has bounced back from a correction and is now facing some indigestion as it sits at or below resistance. In the short term we are probably facing turbulence but in the long term I think there are enough catalysts to push us higher.

]]> by: Melinda Baker http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32970 Tue, 06 May 2008 19:10:33 +0000 http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32970 I've been reading your column here for a few weeks and wanted to get a sense of where you thought we were; should we be in the market or out? I've been also reading a new blog at Fisher Investments Blog that has been touting the fact that they believe we're in a correction, not recession and we should just hold tight and ride this one out. Thoughts? I’ve been reading your column here for a few weeks and wanted to get a sense of where you thought we were; should we be in the market or out? I’ve been also reading a new blog at Fisher Investments Blog that has been touting the fact that they believe we’re in a correction, not recession and we should just hold tight and ride this one out. Thoughts?

]]> by: Angelo http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32961 Tue, 06 May 2008 03:52:31 +0000 http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32961 looking at a weekly chart volume has been declining foe the last 5 weeks of this rally,what do you make of the news of the 63% put jump, headge or fall ? looking at a weekly chart volume has been declining foe the last 5 weeks of this rally,what do you make of the news of the 63% put jump, headge or fall ?

]]> by: Russ Abbott http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32958 Mon, 05 May 2008 21:32:16 +0000 http://www.tradersnarrative.com/number-of-sp-500-highs-vs-lows-suggests-caution-1674.html#comment-32958 Hi, I saw some of your columns on Seeking Alpha and found my way here. I've just subscribed to your weekly(?) mailings. It looks like you are doing interesting work! I appreciate it. Have you ever looked at the ratio of implied volatility of calls to implied volatility of puts? It would make sense, for example, to look at that for some general security or index like QQQQ, SPY, or DIA. The higher the implied volatility of an option, the more expensive the option, which means that the option sellers are demanding more to sell options in that direction. So a high implied volatility ratio of calls to puts means that option sellers (and buyers) see the likelihood of a price rise as greater than the likelihood of a price decline. Of course, until one looks at historical correlations, it will be difficult to tell how useful this might be -- if it's useful at all. And if it is useful is it a leading indicator or a contrarian indicator? -- Russ Hi,

I saw some of your columns on Seeking Alpha and found my way here. I’ve just subscribed to your weekly(?) mailings. It looks like you are doing interesting work! I appreciate it.

Have you ever looked at the ratio of implied volatility of calls to implied volatility of puts? It would make sense, for example, to look at that for some general security or index like QQQQ, SPY, or DIA. The higher the implied volatility of an option, the more expensive the option, which means that the option sellers are demanding more to sell options in that direction. So a high implied volatility ratio of calls to puts means that option sellers (and buyers) see the likelihood of a price rise as greater than the likelihood of a price decline. Of course, until one looks at historical correlations, it will be difficult to tell how useful this might be — if it’s useful at all. And if it is useful is it a leading indicator or a contrarian indicator?

– Russ

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