Custom Search

Thursday, February 19, 2009

Still More Downside

From the post Risk Reward Favors Short Positions:

"This is going to be awesome (for Bears)...

The stimulus package and the bank bailout is going to be sooo disappointing..." -TheFinancialNinja, 02/05/09

The CBOE Options Total Put/Call Ratio (CPC) still has quite a way to go before there is even the remote possibility of a bottom. A spike in the 20 day EMA (blue line) of the CPC to at least 1.10 is absolutely necessary.

Wait for the capitulation rinse in equities. Currently, the decline has been orderly... perhaps things will get a little more frantic as the price closes in around the 741 panic low.

5 comments:

Anonymous said...

Ben, Thanks for providing this data -- it is hard for mere ninja wannabes to obtain and interpret. Still following the ninja plan.

x4398yy said...

where is your gold post, ninja?

LOL

Jonathan B. said...

Ben,

What do you make of the fact that the VIX is actually down on a day that the market is tanking. I can't decide if that's incredibly bullish or incredibly bearish...

Maybe it's indicative of declining liquidity in options markets, as spreads increase (see http://scripts.mit.edu/~birge/blog/investment-gains-are-becoming-harder-to-find-long-or-short/). Or maybe it means smart money sees a bottom? That might be bullish. On the other hand, it means a lot of people will be caught with their pants down if it continues, leading to a nice panic sell-off. So I just don't know what to make of it.

Anonymous said...

The Nov. low was a "de-leveraging" low: I do not recall any mass, that is, small-investor or retail "panic":
despondency, sure, but no rush to liquidate amongst the retail investor.
Most smallholders can afford to keep holding, and do continue to hold, and will only sell if lack of current income forces them to it - hardly a panic.
In fact I know some that would buy if they had more income at the moment.
I just think "panic" is not the right word for November: unless you are limiting that description to the hedge funds, whose dumping dropped the Market.

Jerry Gene said...

I really like your writing style. Nice Post keep it up.

Asus - 15.6" Notebook 4 GB Memory - 500 GB Hard Drive - Black

Asus - Eee PC T101MT-EU47-BK Net-tablet PC - Black