all about mkt indicators - sincere 2011

[...]... Figure 1.6 4 Note: Look at the All Equities Only” columns Focus on the ratio under the ISEE column In the example above, it is 197 You can also look at the All Securities” columns In the example above, the ISEE ratio is 134 ALL ABOUT MARKET INDICATORS 24 FIGURE 1.6 All Securities Time Calls Puts All Equities Only Total ISEE Calls Puts All Indices and ETFs Only Total ISEE Calls Puts Total ISEE 16:10 350889... you believe the underlying stock will fall in price Retail 18 ALL ABOUT MARKET INDICATORS investors who buy put options participate in the falling stock without actually having to short the stock Sometimes people buy puts as insurance to protect their portfolios The next indicator, the Put/Call Ratio, is a way of monitoring whether more option traders are buying calls or buying puts Keep in mind that... Put/Call Ratio in 2003 HOW THE CBOE PUT/CALL RATIO WORKS The Put/Call Ratio is updated every 15 seconds by the CBOE The purpose behind this contrarian indicator is that put and call buyers are generally wrong about the market, especially at tops and bottoms Historically, retail speculators have a rather poor record of guessing market direction Although the Put/Call Ratio is constantly updated, it only... some Thai, and others like American You can’t say one is better than the other There is no one-size-fits -all indicator 6 ALL ABOUT MARKET INDICATORS It’s a personal decision, and by the time you’ve finished, you’ll have a better idea what works for you Although there are a dozen reasons why you’d use market indicators, perhaps the most important is this: The next time someone asks you, “What’s the market... can also have ISE automatically send you a daily e-mail of the Call/Put results Select the tab “How to Subscribe” in the middle of the page WHAT SIGNALS TO LOOK FOR 1 Buy: When the All Equities Only” Call/Put Ratio is under 100 (more puts are being bought), it’s a buy signal Under 65 is a screaming buy 2 Sell: When the All Equities Only” Call/Put Ratio is over 250 (more calls are being bought), it’s... Because option speculators make split-second decisions under duress, more than likely they’ve made the wrong decision However, applying a moving average can smooth out the choppiness (You will learn about moving averages in Chapter 3.) 26 ALL ABOUT MARKET INDICATORS Advanced Hints Sometimes it’s best to look at a range of numbers For example, the all- securities Call/Put Ratio may have the following... use a different chart program, feel free to skip the step-by-step instructions WHAT THE CBOE PUT/CALL RATIO DOES The Put/Call Ratio tracks the volume of put and call options that trade on the Chicago Board Options Exchange (CBOE) Specifically, the idea is that option put buyers, who are aggressively bearish, are frequently wrong And option call buyers, who are aggressively *If you’re using StockCharts.com,... details ALL ABOUT MARKET INDICATORS 20 bullish, will also be wrong When the indicator hits bullish or bearish extremes, it might be a clue to do the opposite STEP-BY-STEP: HOW TO READ THE PUT/CALL RATIO IN FIVE MINUTES 1 Type www.stockcharts.com in your Web address line (or open any chart program) 2 On the right side of the screen, enter the symbol $CPCE, and press “Go.” 3 The CBOE equity Put/Call Ratio... Psychology FIGURE 21 1.5 Ratios Total Put/Call Ratio Index Put/Call Ratio Equity Put/Call Ratio CBOE Volatility Index (VIX) Put/Call Ratio 1.19 1.64 0.82 0.25 Source: CBOE 2 Sell: An equity Put/Call Ratio lower than 0.75 (more calls are being bought) is a sell signal Less than 0.50 is a screaming sell 3 Hint: Look for a series of consecutive days of high or low Put/Call Ratios before taking action 4 Note:... forecasting 16 ALL ABOUT MARKET INDICATORS the market, especially at turning points He learned that you could do well if you did the opposite of what the majority of the writers advised Although officially called the Investors Intelligence Advisor Sentiment Survey, sometimes you might see it referred to as the bull/bear index Their subscribers get the survey results immediately along with a daily e-mail HOW . publisher. ISBN: 97 8-0 -0 7-1 7504 3-1 MHID: 0-0 7-1 7504 3-6 The material in this eBook also appears in the print version of this title: ISBN: 97 8-0 -0 7-1 7488 4-1 , MHID: 0-0 7-1 7488 4-9 . All trademarks are. McGraw-Hill, the McGraw-Hill Publishing logo, All About, and related trade dress are trademarks or registered trademarks of The McGraw-Hill Companies and/or its affi liates in the Unit- ed States. turn the results into profitable trades will be a challenge. ALL SIGNALS ARE GO! All About Market Indicators was written for everybody who partici- pates in the stock market or is thinking of doing