Financial history doesn't repeat itself, but it often rhymes. You can't be stupid enough to trade off anything I say.... I'm lucky they let me out of the straight-jacket long enough to trade.

J. P. Morgan

"Sell down to your sleeping point"

Monday, December 21, 2009

Call Put Ratio

Tony was all Wet about Call Put ratios (hey, I'm just fucking around).

Call Put ratios are not bad Short term and Swing sentiment indicator. I hate writing this stuff because i'm happy for people to grind in ignorance.

I stole this chart btw... Hey... I'm on a roll. But the inicator points to a one day or half day pullback. or a good probability of a "Red Bar" the next day. Here is the thing, That is correct, but you have to realize that it's a Short term indicator, and the "half day pullback" could have already started, when you see the indicator. So for example if the futures are Deep in the red tomorrow, its probably better to buy them, because the Call Put pullback is probably over in the short term.

but if you look at the Extremes, the 3 standard deviation moves the moves outside the normal ok the Greater than 2 Standard Deviations. these tend to indicate an impending swing high on the daily. So +1-5days, a top should form.

But to toss all of that and just go into some EWT... it has a tendancy to be the Wave 3 Buying Climax, the short term pullback the next day tends to be Wave 4, then we build a wave 5 over the next few days.

now to go back to my Solid Model, if we still need a wave 5, it would be nice if it happend on some kind of "Breakout" between now and 11am, for a nice Turnaround Tuesday.

give us a nice Shooting Star and we are done with this swing.

But As i'm constantly harping... when I ran EWT the problem is I always felt like I was waiting for one last wave 5. So IMHO it is best to fly by the seat of my pants when looking for wave 5 Wave 5 wait mode.

Now if I had been watching CNBC and I saw Kudlow yelping and going YeeeeHaaa with Melissa Francis, and they looked like they wanted to throw down during "The Call"

I could say "Good Probability of a Top"... It's fucked to say it, but you are not just looking for enthusiasm... you want to see Froth on their lips.

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