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Put-To-Call Schizophrenia: Three Month High Followed By Three Month Low, A Never Before Seen Event
After a few hours ago we highlighted that on Friday the put to call ratio surged to a three month high, it was only natural, in this hollow sham of a market which is now entirely dominated by two or three traders, for us to get confirmation that not only did the Put to call ratio plunge on Monday but it did so with gusto: falling to a fresh three month low, an event which according to Sentiment Trader has never occurred before. Welcome to market schizophrenia you can believe in.
From Sentiment Trader:
Yesterday, we looked at this indicator, which showed a three-month high in the level of put option trading versus call option trading in equities, despite the S&P 500 being near a multi-month high.
That kind of activity was unusual, and it got even more so today. Never before has this indictor swung from a three-month high to a three-month low on back-to-back days, but it has now. Traders went from heavily trading puts on Friday to calls on Monday.
We also saw another huge extreme in call option buying on the ISE exchange. Historically, that kind of surge in call buying has been quite bearish for stocks going forward, but it failed completely during December. Not coincidentally, that's when the ratio started being very heavily skewed by trading in low-priced financial stocks. Once again on Monday, Citigroup call options alone accounted for 70% of the volume in the 10 most heavily-traded call options.
The skew from trading in financial was also prevalent in the ratio from the CBOE shown in the chart above, but not to the same degree. It does make it more difficult to rely on this data as an indicator when just a few stocks are making them swing wildly from one extreme to another.
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Trouble in paradise.
XRT now at "do or die" level.
What's the new sector ? Banks ?
Which I will title the crazy as mofo indicator, defined as optioning the most risk on trade. This data is a kin to the Hindenberg omen if not the same thing. No one knows how to trade this market because it is ridiculous. Banks? Hahaha. Right in the face of the FRAUDCLOSURE CRISIS.
We have a recovery for some. Only thing is how much more debt has been issued over the last two years? more than ever before. Governments are bloated and dead.
Banks?
Robo post the chart linked here if you don't mind..
http://www.indexindicators.com/charts/sp500-vs-put-call-ratio-total-1d-s...
I've been asking ZH to post that chart for 2 days.
Nice chart. Looks like the Ides of March will see an even larger (exponential) correction this year.
Let me try. It's called insanity institutionalized. And it can go on as long as people are willing to accept that it's normal and no big deal. Since denial knows no bounds, this could go on for days, months, even years. Particularly when there seems to be only two choices. More insanity or the black abyss of waking to your own insanity.
It all reminds me of the Tasmanian Devil on Saturday morning cartoons.
"The difference between genius and stupidity is that genius has its limits."
-- Albert Einstein
Also by Einstein:
"Only two things are infinite: the universe and human stupidity, and I'm not sure about the former".
CD
The markets can stay "insane" for longer than you can stay solvent is what Keynes meant to say...
Ultimately the markets are not insane. It's the people (and the people who program the HFTs) who are insane. And we are most certainly insane by any measure of sanity except our own. One is not a good judge of sanity when they are insane.
Perma-Boner stock AZO finally cracking.
Look at the 10 dma of the CBOE equity put/call ratio and see that it's near yearly lows. Complacency was in the air yesterday with gold but not today. There is complacency is in the NDQ. TD monthy count in silver, NDQ, RTY, DAX are at sell/sell short exhaustion levels of +9.
http://www.indexindicators.com/charts/sp500-vs-put-call-ratio-total-1d-sma-params-2y-x-x-10ma/
goldmiddelfinger
do you have a chart for the DeMark monthly count in the names you mention?
look at the SPX against total put/calls with a 10 day smoothing and observe the 100% predictive value during the intire post crash 2 year period once -1 sd is touched we go down.
http://stockcharts.com/freecharts/gallery.html?%24CPCE
Sentiment trader might go back on meds or do its homework
Neither was P/C a three month high or two year high
In fact, we saw the same quick flip flop in reverse from Feb to March at the 2009 bottom
Silver and Gold got clobbered, but I bet on a higher low for silver anyway, time to load up on physical
That all time high chart showed up only an hour ago...60 minutes later and now its all time low? Never seen more manic depressive lunacy ever.
Its rather anecdotal but I've had strange experiences with people lately.
I'm on the same page. Odd encounters lately. Anectdotal... maybe...
Ditto...The Collective Insanity is nearing a rolling-boil...
My office is in a small town of 15,000. So outliers are noticeable. Three different people ran their cars into three different buildings yesterday within 5 hours of each other. I just came back from lunch and I saw another car impaled into the front of a store.
If I see this twice a year I'm surprised.
Maybe those Razorback birds and fish were ahead of the curve.
I saw a carwack a telephone pole yesterday. Weird.
The pole was just standing there all by it's self.
Ha.
ARGHHH!!!
That was perfect.
You made me spit coffee all over my keyboard.
I saw a car take out a light pole in MN yesterday.
call in Rod Serling!
In all seriousness, those were people who trusted the MSM and their elected officials, and who no longer could cope with fact that their REALITIES were far different than the BS they've been fed. Its sad, because these were not bankers, they were probably real American Taxpayers. How much of the burden can they carry? They are being squeezed to death, literally.
The Fed's ZIRP, POMO, and quest to save the banks is not a good thing.
The put/call ratio makes sense if that is the way to play the Fed moves. My guess is that there is a trade that is working but it is not publicized.
While it's amusing that 2 or 3 traders swing the count around intraday, the 10 dma tells a clearer story of where the conviction lies.
There is a trade logic in this quick p/c swing. In schizophrenia lies opportunity.
There is also opportunity in objective reasoning.
I watch these number and I get this funny feeling....
http://www.youtube.com/watch?v=Jtkg6lr746M
....that it's pretty much over except for the shouting and finger pointing.
sunny
Yep they know its over, and looks to me like theyre setting up this 'debt ceiling battle' to be a very convenient way to start the shouting and finger pointing while the markets tank again and none of it was their fault of course, and can fix it if they can just get more blank check books.
+1
Austerity looks less brutal to the masses when it is in the name of reducing debt.
Can you MW perma losers finally admit you were DEAD STINKING WRONG!?
Read my posts from yesterday.
Jeez.
MW?
I believe he is using it for MarketWatch.
Who is wrong about what and why?
But then, that is probably expecting to much of a kindertroll such as yourself.
The ten Yr bond couldn't even get above 3.5%..bonds and now crb see something entirely different from stocks..
Rates are not going higher.
vc
Well theyre not going higher this minute, but like this article shows high to low swings only take a blink of an eye now.
'Inflation spikes in Europe' is the Bloomberg headline? Europeans see spike in food and energy costs as govt begins confiscating their pensions...WHEW sure am glad nothing like that is going on here!
Chuckle....yet....
Cash is King. Corps aren't spending ANY of it.
I know it doesn't roll off the tongue quite so well, but "market bipolar disorder" would have been a much better choice.
Schizophrenics don't tend to go to opposite extremes.
And before bipolar they called it manic depressive. Guess that wasnt PC enough.
Gold. Gold will be CRUSHED. Welcome abord Slim.
There's way more to this than meets the eye. It was imperative to scald commodities speculators, it was imperative to save the dollar from revisiting recent lows. Inflation is now rampant in global economies. UK and Europe fear that the 'genie is out of the bottle'. The Western world with its reliance on Mid East (peaked) oil is now more vulnerable just as Asian economies are getting less vulnerable to supply shock.
The Fed has taken note of the inflation arm of the biflation curse they find themselves in. You wanted inflation? You're getting it. Gasoline pushing $3 is a political problem as much as an economic one. The trouble is housing is now double dipping, employment is not picking up as it should and real incomes are stagnant. It was time for action.
nice bullet points. but how do we prick the commodities bubble without harming our stash of MBS? Biflation is wages and personal income falling faster than prices? And oh the political problem. in 06' Hank Bazooka Paulson asked his old firm, Goldman to rejigger their commodity index, the most highly followed of its kind. They took out gas futures, the traders dropped their positions, and gasoline fell like a rock. Can they do it again? (The Am people weren't fooled they voted in the Dems in a tidal wave of political change,[hahah], only to turn around in 10' and vote in the Republicans in a tidal wave..
Housing is the inverse of empty next syndrome. Houses A is empty, House B has 3 families living in it, employment sucks, real incomes suck. It was time for action, yes it was back when the Bush admin was throwing money at Iraq, (Petraeus threw a million at a water park which is in ruins) Now isn't the time to vote no on the debt celling that was ten years ago. me thinks all that money they spent is somewhere, and we should orphan hard currency to all but American citizens who can prove they have a right to the hard cash they hold in their hand. but that's a problem too.
I'm referring to a temporary bubble prick. They can't sustain it else jeopardize their goals. The Fed was feeling the heat and was pushed by all the whining US Gov-dependent corporates because their margins were getting hit badly. The alternative would have been their putting out warnings on earnings and spook the stock market. How could GM thrive with palladium, gasoline and copper all through the roof?
The Fed can't and won't prick the bubble too strongly because that would harm the other half: US energy corporates have big pull. So do miners and related industries. And the ag sector.
Perhaps a rejigger of GSCI could help. Bloomberg is pushing its own index. Maybe it will get adopted with a Fed-friendly slant.
The debt ceiling will end up in a compromise because the realities of governing are different from the realities of campaigning. There will be overwhelming pressure to raise it. While many Tea Party members like to say the pressure is from widows, orphans and school-teachers, the reality is those entities have little power. Same with labor unions (only 7% of private US labor is union). The real pressure comes from shaky US corporations, some still heavily loaded with bad debt that needs to be rolled, suffering from global competition and a constrained US consumer who is suffering from the deflation arm of biflation and 22% consumer loan rates.
Been under the impression that US corps are cash rich. But even Wayne Angell knew raising interest rates was counter inflationary, and I guess Bernanke proved him right. Nobody would believe a temporary bubble prick in commodities, which means that were BB to successfully keep his foot on the gas, he would unleash a deflationary spiral. (once speculators were sure he was serious, and if he isn't then they buy the dip, and put even more vigorish into the trade) All of that would overheat China once more, and export more deflation to the US, where biflation rules, I would have bought that flat screen TV but I bought a chicken for dinner instead, continues. In the end I think the UST rates go higher than mortgage rates, in order to keep a fresh supply going. And maybe this is why the Fed is buying their own corn?
Fed is helping the funding of US debt at low rates, but is also spoon feeding financial sector which still needs it despite what you've been told. But there are many others out there with lots of political pull who routinely run to the Fed when they're in trouble. Yes, it's a shakedown, but for decades they've always won out.
I've said it before, US corps "flush with cash" is just a golden parachute for the C-suite. They aren't going to deploy or gamble with this gift. They're anticipating a tough road ahead with a eroding margins, consumer deflation and mounting foreign competition. Not a "all in" atmosphere.
How long does it take for the Roulette ball to fall? 30 seconds maybe?
Now consider this quote from Michael Hudson, economist, distinguished research professor.
Take any stock in the United States. The average time in which you hold a stock is–it’s gone up from 20 seconds to 22 seconds in the last year. Most trades are computerized. Most trades are short-term. The average foreign currency investment lasts–it’s up now to 30 seconds, up from 28 seconds last month.
Source:
http://www.nakedcapitalism.com/2011/01/guest-post-michael-hudson-average...
I read once that during the election, Obama asked why the markets were a casino and why could'nt the markets just go up slowly and steady. I wish I had a reference or link for that. Insanely ignorant and marxist attutude towards the stock markets. Well, like Jefferson said, now that the banks have complete controlover the money supply they can do what they want with that portion. And now that Obama wants the market to not be a market but a retirement/ inflation generator the banks have that portion under control. Shorts have all thrown in the towel yesterday- a sure sign of a top- but when the stock market shares are being held and squeezed in a classic deBeers supplyside squeeze, the equity markets will not drop until either the banks revolt or the GOP hammers the FED and threatens action. Then watch the flash crash. Until then, go long because its a control economy 100% now and the banking system and plutocracy run EVERYTHING. PMetals are the only democratic wealth retaining system left because paper money is here today but can be gone tomorrow except by government enforcement. Welcome Mr. Orwell...
Charts are usless in uncharted territory.
Charts are usless in uncharted territory.
Clever
Nothing new under the sun?
P/C led turns in 2007, 2008, 2009, 2010 and 2011
http://stockcharts.com/freecharts/gallery.html?%24CPCE
ISEE even better
http://www.ise.com/WebForm/viewPage.aspx?categoryId=126&header3=true&men...
It looks like the HFTs are making a killing off trading options. Why trade when you can rob?
http://stockcharts.com/freecharts/gallery.html?s=cboe
IMHO we all seem to be giving the Fed, the Banks, the Media and the Gooberment way too much credit for being able to 'manage' this Ponzi. They have created it, and for the moment they are able to sustain it, but when it goes it will go big. Call me crazy ( go ahead) but I've been buying little chunks of TZA all the way down from 50 ( when 50 was 10) and will keep doing so until I wake up some morning able to write a check, pay off my mortgage, and laugh my ass off all the way to my bolthole in Chile. I don't care if it takes 3 months or three years - this game will end, and badly ( except for those holding a shitload of TZA). And as much silver as possible, of course. Silver and TZA - you can have your cake and eat it too if you are patient and can control that queasy feeling in your gut that is telling you to "RUN LIKE HELL!" Of course the Goobs could declare shorts illegal and there goes TZA but that's what the Second Amendment is for.
holding short ETF's is not what you want to do. they have a "time decay" almost like options. In other words, don't expect TZA to get anywhere near where it was at the March '09 lows. Use these vehicles for short term trading only.
If we look at daily volume, its at 40 year lows. Traders use the market to sell and buy stuff at highs and lows. It the market refuses to allow price discovery due to government abstract reasoning of wealth effect, then there is 100% no reason to participate. You can't buy anything at a good value and you certainly sell when you think its at or over value. So as people sell due to perceived overvalue, the volume gets lower and lower until nobody is in there. Would you buy higher than you sold if your motivation was value?
Only the government has the motivation to LoSE money by purchasing assets at over value. That fucks up the entire market concept because a huge buyer with infinite senior currency will drive bids higher because it wants the equity to be valued at 2007 levels.
If you wanted to destroy a market, thats textbook because all markets are derived from the human desire to "make money." ony the stupid government would create an entity that desires to "lose money." if you are buying from this entity, knowing its not motivated by greed but motivated by absolute power accumulation then I would not use this market, I would use eBay.
Market= greater fool and accumulation of wealth via the greater fool
Government= existence is motivated by the control of others by force and law
Libertarians naively thing government exists to prevent loss of life and prevent fraud and lose of property. Government, in this plutocracy, exists for itself and is acquiring employees and power to create control. So I say lets all get on this gravy train and work for the FEDS.
This is a classic supply squeeze- like deBeers diamonds or todays airlines. To make margin and money, you remove liquidity and force the higher price by supply reduction. Diamonds are not rare and inherently worthless except for the fact that a south african company hoards them and spits out a few a year to make money
"Only the government has the motivation to LoSE money...."
So it seems in this house of mirrors. Then again, take a TIPS pomo day like today. Everything goes down. It's one of the few times, although occurring at regular intervals of late, when you get the sense it's not a zero-sum game. Check out an options chain around mid-day, i.e. today, and observe price declines on both sides of the straddle. There's someone else playing, scraping chips off the table.
Does one not wear protection? This chart only demonstrates that, in a synthetic market, it's best to protect on the way out should there have been a idiot attack over the weekend. Once the weekend past, the bets came down....
Understanding the poision and how it works is great. Ingesting it yourself to test? Not so smart.....
tome to pay attention to HSKAX, which is plumbing new lows. when everyone gets on the same side of the trade, things happen
My friends and I have a theory about whats going on in the world nowadays when up is down and bad is good...It's the aliens. They simply have their stupid-ray on full blast since about 20 years. They assumed all the dope us baby boomers took back in the 60's & 70's would do us in but alas, some resisted. Now they are just waiting for our own stupidity destroy us all, then then come in and mop us up before they raise the Cyborg flag.
its freaking BS. Numbers mean nothing. Indicators, including volume, are all fake. They are CONTRIVED! How can anyone possibly verify any data in this day and age. Those extremes are painted, plain and simple. They control everything. Nothing left to do but hang the mutherfuckers....the whole lot of them!!