• 2 days China Slaps Alibaba With Record $2.75B Antitrust Fine
  • 3 days The Pandemic Has Culled The Middle Class
  • 4 days Legacy Automakers See Massive Spike In Sales
  • 5 days Tesla's Biggest Competitor Is Going Cobalt-Free
  • 6 days Stocks That Could Benefit From Biden’s $2.5 Trillion Infrastructure Plan
  • 8 days The Mafia Has Expanded Its Influencer Under COVID-19
  • 9 days How Fintech Will Get Skeptics Into Crypto
  • 10 days Monday Markets Rise On Stellar Jobs Report
  • 13 days Not Even Bribery Allegations Can Crush Cannabis Boom
  • 17 days Canada May Become Leader In Booming Battery Market
  • 18 days Nearly 42% Of All Amazon Reviews Are Fake
  • 19 days Kidnapping Is Big Business In Nigeria
  • 20 days COVID Fraud Amounts To Nearly $570M
  • 23 days Art Is Now An Algorithm
  • 24 days TikTok Threatens America, Tesla Threatens China
  • 24 days Small-Cap Energy Sectors With Big Upside
  • 28 days Coinbase Valued At $68 Billion Ahead Of IPO
  • 30 days 3 Stocks To Watch Amid AstraZeneca Covid Vaccine Snafu
  • 31 days Get Ready For First Tax Hike Since 1993
  • 34 days Tech Majors Bet Big On Clean Energy
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

To Test Or Not To Test

10/22/2014 6:10:54 AM

Good morning Traders,

As the market moves off this bottom, there remains a level of fear that suggests the rally will continue.

Put/Call Ratio Chart

Note above the action we got around the 08 top...

Below we show our inverted forecast because we remain in Buy Mode. So our next target top would be around turkey day. That's normal seasonal action.

SPY 2014 Forecast Model

What comes next year is more worrisome. We'll start putting together our forecast for 2015 as we get into December.

Options traders on the VIX are betting heavily for the VIX to drop. Sometimes this crowding behavior can trigger a retest.

VIX Put/Call Raio and Open Interest

Our measure below shows when the individual has moved back into the market, which usually occurs at tops. We're no where near there now. That's bullish as well.

Equity to Index Option Volume Ratio

Supporting the bullish scenario is the rate of change on sentiment from the AAII. Going back to 2001, it doesn't get this low, that often.

AAII Sentiment rate of Change

In the short term, the breadth and volume ratios have spiked back up towards highs. That suggests that markets may correct internally as they set up the next advance, which should take us to at least test previous highs. We'll use any internal corrective action to position in some CALL options.



Back to homepage

Leave a comment

Leave a comment