Get Used To It

This is clearly not the market we have gotten used to since September. For months sentiment would swing between euphoria and just plain bullishness. A few hours of put buying was enough to produce a rally. That is no longer the case.

We are now in a market where it pays to wait for extremes. I believe we will see bouts of extreme pessimism this Summer and those will be the best entry points. Today's put buying is pretty extreme no matter which ratio one looks at. A few months ago it would be enough for a month long rally. I believe it should be good for at least a bounce.

3 comments:

Anonymous said...

The put/call numbers have been in an environment of lower volume in the options, which can (and appears to have) reduced their reliability, but it's getting harder to discount those big ratios.
I think the key is the financials. Check out those charts. They are scary and need improvement for a real rally to take hold.

Tsachy Mishal said...

More sentiment measures are starting to line up. But we are not at extremes, especially on intermediate term indicators.

Tsachy Mishal said...

I would be surprised if we saw much more than a 20 point rally but 20 points is better than nothing.