Thursday, August 4, 2011

Are we in for a rebound?

Today we've had a pretty heavy drop in the SPY, that has been preceded by a series of down days. It could be tempting to join the panicking crowd, but the crowd usually gets it wrong.
The put/call ratio and the VIX/VXV ratio tell their own story:
Both of them are pretty high, the situation that is usually accompanied by a pop in the market.
Disclosure: I'm long.

1 comment:

  1. the absolute level of these sentiment indicators are not that suggestive,

    it's the dynamics of these, eg, local maxima, mimima tells you something.

    it's ppl start to hedge or taking profit of old hedging, rolling them over, or just unfold them.