• 288 days Will The ECB Continue To Hike Rates?
  • 288 days Forbes: Aramco Remains Largest Company In The Middle East
  • 290 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 690 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 700 days Big Tech Disappoints Investors on Earnings Calls
  • 701 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 703 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 707 days Crypto Investors Won Big In 2021
  • 707 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 708 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 710 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 714 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 715 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 717 days Are NFTs About To Take Over Gaming?
Stock Barometer

Stock Barometer

Stock Barometer

Stock Barometer is completely independent. We have never and will not ever accept compensation from any company whose stock we recommend. Our goal is to…

Contact Author

  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.

Regards,

 

Back to homepage

Leave a comment

Leave a comment