Dow Jones and the apparent imbalance of market forces.
The money has been made, a rally from mid October has pushed the market quite high at a steep slope.
However at this fever pitch, there are many indications that regardless of market fundamentals or traditional technical indicators and sentiments, history paints a particular picture of the present market. There is a notable parity between the CBOE put and call volume which shows that in previous instances, the outcome is quite clear. The current level depicted on the left (main chart above), shows an imbalance of these figures, and the actions which typically follow are all too clear. It is expected that the reader understands that this relates to standardized options and is familiar with put and call options.
In the highlighted sections, we see that these levels are pushed well outside of an average, or normal range. This means that there is an imbalance, as this chart is the put volume, minus the call volume. The image below shows the Dow at the second highlighted section on left pane. Notice their similarity to the current market
It would not be sufficient to say that simply because the Dows look similar on two charts, that the outcomes of will be equal, however it is clear that the market conditions show an underlying similarity based on the put and call volumes. We can say that in theory, that these extreme values had a significant impact on market activity.
Similarly we also see a marked decrease in interest from the bull, who has made his money and his power is clearly diminishing, and the balance of power may well violently shift. We don't know, but the odds are good enough.
These situations show that it is reasonable to take the position shown, and at least unreasonable to assume it is time to enter a long position, and that it would be apt to exit one. If we are incorrect, we take a minimal risk and protect our capital, but if we are correct, the target price will result in significant profits.
However at this fever pitch, there are many indications that regardless of market fundamentals or traditional technical indicators and sentiments, history paints a particular picture of the present market. There is a notable parity between the CBOE put and call volume which shows that in previous instances, the outcome is quite clear. The current level depicted on the left (main chart above), shows an imbalance of these figures, and the actions which typically follow are all too clear. It is expected that the reader understands that this relates to standardized options and is familiar with put and call options.
In the highlighted sections, we see that these levels are pushed well outside of an average, or normal range. This means that there is an imbalance, as this chart is the put volume, minus the call volume. The image below shows the Dow at the second highlighted section on left pane. Notice their similarity to the current market
It would not be sufficient to say that simply because the Dows look similar on two charts, that the outcomes of will be equal, however it is clear that the market conditions show an underlying similarity based on the put and call volumes. We can say that in theory, that these extreme values had a significant impact on market activity.
Similarly we also see a marked decrease in interest from the bull, who has made his money and his power is clearly diminishing, and the balance of power may well violently shift. We don't know, but the odds are good enough.
These situations show that it is reasonable to take the position shown, and at least unreasonable to assume it is time to enter a long position, and that it would be apt to exit one. If we are incorrect, we take a minimal risk and protect our capital, but if we are correct, the target price will result in significant profits.
Comment:
Trade exited at 35510