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Personally, I have not found end of day P/C ratios to be very timely even
when smoothed as suggested by some. It looks like the BMI intraday
statistics of $call volume and $put volume might have some use, although
Trade Station will not chart them because of character formatting
inadequacies. Neither BMI nor Omega have offered a solution to this problem.
Most other measures of price and issue and volume breadth, even some
volatility measures, indicate that the P/C ratios are off base. The fact
that they are used as a psychological indicator and did not have full
representation last week as someone else suggested must be the answer.
The proprietary Z timer on the attached chart is in agreement with the P/C
ratios in so far as it says that risk in calls is less than in puts and
that appears to be what is being purchased. OEX and Total Equity Call open
interest is much higher than put open interest and has been increasing.
BobR
At 12:05 PM 12/28/97 -0500, yorker@xxxxxxx wrote:
>
>Bob,
>
>What do you think about the market direction in relation to PC readings?
>In other words the PC ratio is bearish but it is bearish after a market
>downleg. I wonder how significant this is. I would say if the market were
>overbought then the PC readings of late would definitely be a matter of
>concern for the bulls. But now the market is in no way overbought (short
>term) and I am not sure exactly what that would imply at this juncture.
>
>My best guess is that with a bearish PCR and an oversold market we will get
>a very strong move next week with the direction indicated early on.
>
>Kind regards,
>
>Yorker
>
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