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.

4 comments:

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?

chart

thanks

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.

Thanks