Comments on: Sentiment Overview: Week Of October 3rd, 2008 http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html Freshly squeezed market commentary & analysis Mon, 22 Mar 2010 13:51:37 +0000 http://wordpress.org/?v=2.0.2 by: Babak http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34973 Mon, 06 Oct 2008 00:35:17 +0000 http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34973 Yiyu, agree with you re ATR not being a gauge of fear. But if you look at the historical pattern, market bottoms do occur near (but not necessarily coinciding with) high put activity relative to call activity. Also, the ISEE is better able to isolate retail option traders activity and as I've mentioned it several times now, it is baffling many in showing not only no fear, but slight optimism - as the market continues to fall! This is downright weird. Anon, oops! I should have mentioned that it is according to the AAII survey - they also ask their members for allocation info as well as bear/bull sentiment. Yiyu,
agree with you re ATR not being a gauge of fear. But if you look at the historical pattern, market bottoms do occur near (but not necessarily coinciding with) high put activity relative to call activity. Also, the ISEE is better able to isolate retail option traders activity and as I’ve mentioned it several times now, it is baffling many in showing not only no fear, but slight optimism - as the market continues to fall! This is downright weird.

Anon,
oops! I should have mentioned that it is according to the AAII survey - they also ask their members for allocation info as well as bear/bull sentiment.

]]> by: zentrader.ca » Blog Archive » Good Blogosphere Reads http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34971 Sun, 05 Oct 2008 02:36:30 +0000 http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34971 [...] Magazine Cover Contrarian Views [...] […] Magazine Cover Contrarian Views […]

]]> by: Anon http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34970 Sun, 05 Oct 2008 02:13:06 +0000 http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34970 Babak, can you please cite or link to your source for "average American investor [is] holding a +35% in cash, only 51% equities and the rest in bonds. " Babak, can you please cite or link to your source for “average American investor [is] holding a +35% in cash, only 51% equities and the rest in bonds. “

]]> by: Yiyu http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34963 Sat, 04 Oct 2008 16:21:56 +0000 http://www.tradersnarrative.com/sentiment-overview-week-of-october-3rd-2008-1915.html#comment-34963 Dear Babak, About the contradictory signals from VIX and Put/Call ratio as you talked about today, I venture an explanation: there's a difference between uncertainty and fear. VIX is more likely to be a measure of uncertainty/risk, As Dr. Steenbarger said today: http://traderfeed.blogspot.com/2008/10/stock-market-volatility-historical.html , ATR is also at the historical high. Same with VIX as volatility measure, it makes no sense to think ATR is a gauge of fear. On the other hand Put/Call ratio is more likely to be a gauge of fear of small investors, since it shows how they think about the direction of the market. So the real question is: which one, uncertainty(risk) or investor fear, usually marks the bottom of market? Of course most of the time uncertainty are accompanied together with fear, but this time we see a clear difference. In my opinion, it's historical level of uncertainty marking the bottom of stock market, since speculators are really awarded for taking higher risks. Dear Babak,
About the contradictory signals from VIX and Put/Call ratio as you talked about today, I venture an explanation: there’s a difference between uncertainty and fear.

VIX is more likely to be a measure of uncertainty/risk, As Dr. Steenbarger said today: http://traderfeed.blogspot.com/2008/10/stock-market-volatility-historical.html , ATR is also at the historical high. Same with VIX as volatility measure, it makes no sense to think ATR is a gauge of fear.

On the other hand Put/Call ratio is more likely to be a gauge of fear of small investors, since it shows how they think about the direction of the market.

So the real question is: which one, uncertainty(risk) or investor fear, usually marks the bottom of market? Of course most of the time uncertainty are accompanied together with fear, but this time we see a clear difference.

In my opinion, it’s historical level of uncertainty marking the bottom of stock market, since speculators are really awarded for taking higher risks.

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