About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Sunday, November 03, 2013

Sentiment -- CBOE Equities Only Put / Call Ratio

I like to watch the $CPCE as a sentiment indicator because it reflects real money put to
work in the options market and not just opinion. A downtrend in the $CPCE shows that players
are becoming increasingly bullish. There is clutter even on a weekly chart, so I have included
6 and 13 week m/a's.  $CPCE Weekly

Sentiment is not just strongly bullish on a shorter term basis, but from a longer term perspective
as well since the $CPCE moving averages have been rolling down trend wise since the major
intermediate market low back in 2011. Note as well that the $CPCE weekly trends match up
well with the $VIX or volatility index in the bottom panel of the chart.

The chart also shows the wisdom of being more careful with stocks in the shorter term when
you spot clustering of low p/c ratios over a short duration and when the m/a's move down
toward that .60 level.

Players are becoming increasingly bullish and complacent.

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