Wednesday, August 25, 2004

Just a quick note to mention that the intraday put/call ratio I monitor (which includes all options, all exchanges) is at one of its lowest levels all year.  The only other times which match this level are 1/16, 3/2, 3/20 and 7/20, all of which came close to peaks in the Nasdaq.  When combined with the other data in the comments from last night, it is looking increasingly likely that we are getting close to a short-term pullback. These short-term bursts off potential intermediate-term lows are tough to fight, but we're seeing the types of extremes now that normally lead to at least a pause even in strong uptrends.  It'll be difficult to bust above resistance and stay there when we see these kinds of readings. 11:36:02 AM

In the widely-watched Investor's Intelligence survey, bullish respondents fell 4% to 39.6%.  This can now be considered historically low, and it is the fewest amount of bulls since the March 2003 lows.  Bearish responses picked up a bit, but are still well below what was seen in March.  So overall, the bull ratio (bulls / (bulls + bears)) is now about where it was in mid-April 2003.  Even though the S&P is 200 points higher now than it was then, we are seeing about the same sentiment situation in this survey. This is not a short-term timing device, as I've showed before, but by simply looking at its chart we can see that when the survey reaches extremes in sentiment, it is a consistent forecaster of market turning points.  If we could see one more week of increasingly bearish responses, it should serve to confirm that we are putting in a longer-term low. 8:50:41 AM