On initial observation, Spikes above 0.80 seem to indicate short term bottoms. imo anything below and looks less reliable as an indicator. edit: Looked at a few scans, market internals are still weak. either more downside or consolidation.
Commercial Net S&P 500 short positions are being dumped: 8/19 -42,157 contracts 12 month low: -55,506 8/26 -36,403 9/2 -31,912 9/9 -28,761 9/16 -17,671 9/23 - 3,686 So, while the Rydex fund switchers are buying bear funds at a clip last seen in August 2004 just before a major rally, and the Commercials are buying and moving out of shorts...which side do YOU want to be on?
...which side do YOU want to be on? Hmmm, tough question ... ... the commercials? Is this right? (If it was only this easy ...)
Steven Smith Call Buying at Extreme 9/27/2005 12:49 PM EDT The International Securities Exchange ISEE, which is basically a call/put ratio, hit 279 at midday, it highest reading in over year. The ISEE is calculated base on only opening customer transactions, which supposedly provides better insight into retail or public sentiment. As such today's high reading could be taken as a contrary, or bearish, indicator.
vhen, thanks for posting that. I'm looking at this: http://www.iseoptions.com/marketplace/statistics/sentiment_index.asp and I can't see any usefulness. For example, look at April/May 2005. Nothing, flat. In any case, its the complete picture that is important, not one single element. Also, look at BP Discretionary (stockcharts: $BPDISC). Although its supposed to be a sub index its so large (88 securities) and so scattered (internet, industrials, retailers, etc.) that it almost is a proxy for the whole market. And it just recently came to its lower range. To me it looks like we're setting a bottom here (not done yet probably).
Fortunately to maintain the Bullish bias of the other sentiment indicators monitored, this ISEE call/put ratio only managed a 200 reading by days end, which is not a spike similar to what occurred in prior spikes and market tops.
A close above the 1219.35 SPX level today will confirm the beginning of the 3 to 5 day rally. The initial target for this upward sequence is the 1228.50/1230.45 range.