About Me

Retired chief investment officer and former NYSE firm partner with 40 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, July 13, 2014

Put / Call -- Speculative Zeal Apparent

The CBOE all - equities put / call is a good measure of sentiment because it represents real
money down on the table and not just advice. The $CPCE has been in a downtrend since
late 2011, signalling increasing bullishness as calls purchased has steadily outpaced put
buying. In recent weeks the longs have reached their most adventurous yet based on the 6
wk m/a of the put to call ratio. $CPCE Weekly

No law says the zeal of the bulls must end here, but experience suggests we have a fairly
extreme reading as we head head into next week and it may portend an exhaustion of sentiment
sufficient to suggest a short term top. Riding the long side when the p / c starts falling from
.70 and above on down has been a decent trade since 2011, but the low p / c readings have
warned of consolidation or market weakness ahead. A low $CPCE reading may only suggest
mild market trouble ahead, but traders at least should be aware.

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