Call me crazy...but look at my hypothesis

Discussion in 'Trading' started by chaykapwr, Jan 24, 2012.

  1. I was studying putcall ratios, namely the effectiveness of put/call ratio>1 to predict immediate (days to a couple of weeks) future price downswings. But i stumbled upon something much more interesting which I would like to get an opinion (or 5) on.

    First, here are the number of days of the year in which the put/call was greater than 1


    Now what did this tell me?

    Well, it seems 05 and 06 are almost identical to 09 and 10. At the same time 07 and 11 look scarily similar.

    Lets dig deeper.

    What was the return of 2006 in the S&P? (which represents 2010 in our recent market run up) 15.79%

    What was the return of 2010? 15.06%

    What was the return of 2007? (right before the crash, which should also represent 11) 5.49%

    and for 2011? 2.21%

    Again, very similar.

    What was the AVERAGE put call ratio for 05 and 06 before the giant spike in 07? .9

    What was the AVERAGE put call ratio for 09 and 10? .9

    What was the AVERAGE ratio for 07 and 11? 1.007

    It seems that we might be reliving 2008 all over again fairly soon

    Conclusion: This shows us one major lesson, which is the process of bubbles being inflated and popped. Following the dotcom crisis Greenspan inflated a bubble to keep the economy afloat in the mid 2000's. It popped in 08. Bernanke has done the same in 2009 and it will pop sooner rather than later based on the above information
  2. QE3 :D
  3. onelots


    can't fade central banks. their whole job is to inflate assets
  4. You just have to time it right. i.e. John Paulson in 2008
  5. onelots


    i bid good luck to you.
  6. this thread was NOT meant for trading advice, but rather to get opinions based on the hypothesis I put forward.

    I.e. any potential flaws? etc etc etc
  7. S2007S


    I have repeated myself many times that the only way to grow this economy is through the creation of bubbles....

    Tech bubble
    Housing bubble
    Private Equity bubble
    Commodity bubble
    Credit bubble

    See the trend, the only way they can create gdp growth in this economy is through the creation of bubbles. No bubbles = no growth.

    Why do you think BUBBLE ben bernanke has rates at 0%, I think the next bubble is in China, China is the other bubble thats been keeping most of this global economy afloat for the past few years, once they slow down the world slows down.....

    BUBBLE ben bernanke is getting ready for QE3............
  8. bc1


    Sounds interesting but calendar years doesn't do much for me. You would have to chart each point and correlate it to a daily graph of the S & P then see what prediction power it has.
  9. In to see a chart of this.
  10. mickmak


    I believe you found the confirmation, not the leading indicator on what the market did.
    #10     Jan 25, 2012