Wednesday, May 24, 2006

Sentiment Check

Here is how the sentiment indicators closed today:

The VIX/VXN volatility complex closed lower today, likely indicating that these have peaked.

The CBOE put/call ratio closed at 1.42, another huge number. It has now closed above 1.0 for 9 days in a row. That has pushed the 10-day average to another record high at 1.22.

The ISE Sentiment Index closed near a 52-week low at 106, representing heavy put buying. The 10-day for this indicator is down to 139, which is below levels hit in October 2005.

I continue to hear from too many managers that are justifying these figures by pointing to increased program trading, or a host of other reasons why they aren't meaningful. Only time will tell, but I suspect we will look back at these readings and say what a great buying opportunity it was.


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