V Bottom

stonedinvestor · Feb 28, 2007

I was listening to the fast money guys yesterday and they all said market goes lower today to probe interday lows etc. I've heard many, many talking heads explain that this is the start of something big. HOWEVER

The put/call ratio is way too high. Closed at 1.7. I looked back all the way to 1996 and cant find one time it has ever been this high.

The put/call ratio is telling me that sentiment is super bearish...more bearish then in anytime since 1996. The put/call ratio is a great contrarian indicator.

When a market suddenly tanks like this, it creates a fabulous V-Bottom where the indexes start climbing higher making the shape of a V.

Since no one will say it I will. I think we have a better than 75% chance for an old school V Bottom. That's right ALL 400 points back By Friday. Impossible?
Let's see.

gnome · Feb 28, 2007

Certainly possible.

Official Chinese Gummint statement about yesterday... "We will support the integrity of our financial markets...."

Assuming Chinese stocks race back up to highs, yesterday was likely just a big hiccup.

bali_survivor · Feb 28, 2007

Quote from stonedinvestor:

........I think we have a better than 75% chance for an old school V Bottom. That's right ALL 400 points back By Friday. Impossible?
Let's see.

really?

bluud · Feb 28, 2007

Quote from stonedinvestor:

Since no one will say it I will. I think we have a better than 75% chance for an old school V Bottom. That's right ALL 400 points back By Friday. Impossible?
Let's see.

Can you keep your mouth shut, we need liquidity, if everyone thinks like you who is going to sell.

Spooz Top · Feb 28, 2007

everyone & their brother margined to the hilt.....a little more downside pressure will bring on the good ole` fashioned margin calls.

austinp · Feb 28, 2007

<i>"if everyone thinks like you who is going to sell?"</i>

I wouldn't worry too much about that. You'll find sellers.

CFerret · Feb 28, 2007

Where put/call ratio can be viewed?

stock_trad3r · Feb 28, 2007

put/call ratios are meaningless

stonedinvestor · Feb 28, 2007

Not so stock_trad3r very useful as todays action displays. I have gone into the past for this:

:With yesterday's historic 63.75-point range on the S&P futures contract and extraordinary swan-dive of -50.33 points (-3.5%) on the S&P 500 index (SPX), we use history and a bigger measuring stick as guides to navigating these troubled waters. The SPX closed on Tuesday at 1399.04 after making a 50-day low of 1389.42. Q: We looked back in history for moves of a percentage decline of more than FOUR standard deviations below the average one-day percentage change measured over the last 30 trading days, which we might call 'extra extra big' on our scale. A: According to the 10 previous occurrences of this event between 1940-1997, SPX has shown a strong bullish edge that peaks 2 trading days after the event. SPX rallies in 90% of the cases (9 for 10) by an average of 4.7% relative to the close on the event date. The overall return of the 10 cases is 4.3%.

>> so the real question lays with FRIDAY> that becomes an incredibly IMPORTANT DAY for our future!

polpolik · Feb 28, 2007

Quote from CFerret:

Where put/call ratio can be viewed?

http://www.iseoptions.com/marketplace/statistics/sentiment_index.asp

I'm not sure what the OP was referring to but I use this as a reference. Not exactly at an all time low. 8/22 of last year was.... the market bottomed right around that time.