Opposite Day

  • We are seeing very heavy call buying today.
  • Investors who missed the rally seem to be buying the pullback. Its funny how investors were uncomfortable "chasing" the market as it rose 7%, but a .2% pullback is enough to generate extreme call buying.
  • Breadth is once again negative but not to an extreme.
  • This continues to look like topping action to me.
  • For the past few weeks tech has been rallying while financials have been struggling. Today, is the exact opposite with the financials leading the way and tech bringing up the rear. Normally I would say positive financials are a good thing but tech has been leading the market.

6 comments:

nicasurfer said...

When you look at call buying do you typically focus on the equity call buying?

Thanks

Tsachy Mishal said...

I look at both but do focus more on the equity. The equity and total are high on the ISE today. On the CBOE the equity only is low, which signals action in calls.

Anonymous said...

Mate, How you monitor extreme call buying action? please share

Tsachy Mishal said...

Here is a link to the ISE. http://www.ise.com/WebForm/viewPage.aspx?categoryId=126

A reading above 200 on the equity is pretty high call buying.


Here is a link to the CBOE

http://cboe.com/data/IntraDayVol.aspx

I will try to write a column on how to use these because many have asked, but I will not have time during the next few days.

Market Owl said...

Call buying has been steadily rising since March, actually an ISEE reading above 200 doesn't alarm me because the 20 day moving average is at 183. 50 day MA is at 187. The call volume has come down today, so actually right now, we're back to 182 currently. I don't see the extreme call buying today. Yesterday was 168.

Tsachy Mishal said...

When I made the post it was well above 200. After 2 weeks of straight up in the markets,I think it is an red flag. Earlier in a rally it matters less.