Saturday, June 18, 2011

It's official! The PC ratio reached 13 consecutive days greater than 1.00

It's official, the Total Put to Call ratio of Equities and Index Options has now exceeded 1.00 for 13 consecutive days, as of the market close yesterday. As mentioned the past 3 days, this is the first time this ratio has had this many consecutive days greater than 1.00 since June 26th, 2008.

It turns out that was the quiet period before the storm to come over the next 9 months. That was a period where we were just learning of the concerns of the Sub Prime problem affecting our economy. and by March of that next year the Dow crashed from the 11,500 level down to the 6,500 level, as is shown in the chart below.

Whether history will repeat itself this time around is anybody's guess. But with all the tampering of the monetary policy by the Fed and a weak stimulus package having little effect on job creation, God only knows where we are headed in the next year. From my vantage point it doesn't look good unless the country has the stomach and courage to do another real stimulus package for this economy like was done during the Great Depression. We need a real new WPA program. But the wealthy and their puppets in Congress want nothing to do with it. As long as they already have theirs socked away, why take the chance and invest in lower income Americans called the Middle Class, they say. I say we had better! What do you say?

Met a really nice guy last night who writes Financial books and has edited some of the classics on Trading and Technical Analysis. Had a great time talking with him. A shout out to Charles!

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