The Differences Between Now and January

In an earlier post I showed how the put/call ratios are looking a lot like they did at the January top. In this post I wanted to go over the differences between now and January.
  • The 30 day moving averages of the put/call ratios are still not showing the excessive enthusiasm they did in January. This is more of an intermediate term indicator.
  • The 30 day moving average of the advance decline line won't be overbought until the middle of next week. It was overbought at the January top.
  • The spread between the bulls and bears in the Investors Intelligence survey is at 25%. In January it was at 35%.
  • Corrections tend to start at the end of January when the market has been rallying for a while. We are in the heart of tax refund season and a seasonally strong part of the year.
I took all these factors into consideration before shorting and still plan on building shorts further. I believe it is always important to consider all the facts. Not just the ones agreeing with one's positions.


Onlooker said...

Wise words. Thanks for that info.

I do have a question about the A/D data though. I show the 30MA at a higher high than in Jan, and at a top, having just turned down yesterday. Are you talking about something other than this?



Tsachy Mishal said...

That's true. But looking at the raw data, we are going to drop a string of 4 consecutive negative numbers starting tomorrow, so it is likel to get more overbought.

Tsachy Mishal said...

Starting Wednesday of next week we will be dropping 8 consecutive positive numbers. By Wednesday of next week we will be very overbought on a 30 day basis.

Onlooker said...

OK, I just wanted to make sure I was looking at the same data as you were. What you said makes sense.