Put to Call ratio hits SELL signal low.

The Put to Call ratio has just hit a new recent low of 0.37 at 7:00am PST. This is flashing a SELL signal for anyone willing to pay attention to it. The stock markets are so overbought right now that, in my view, you buy stocks at your own peril. The last time I have seen it this low on a close for the day was when the Dot.com Bubble burst. Be alert and flexible. This Bubble is about to burst!

I will post the Put to call ratio during the day as the data is available, as I did yesterday:

7:00am PST 0.37
7:30am PST 0.49
8:00am PST 0.57
8:30am PST 0.60
9:00am PST 0.57
9:30am PST 0.61
10:00am PST 0.62
10:30am PST 0.62
11:00am PST 0.63
11:30am PST 0.64
12:00pm PST 0.65
12:30pm PST
1:00pm PST

Post Market analysis Nov. 13, 2008

The market did what I had expected it to, it went down below 8,000 and quickly bounced back up and the market closed up about 550 points to 8,800. This was simply amazing. There are several pieces of information which tells me that the market is not ready to go lower at this time.

The first piece of data was that the Volume today was significantly higher than yesterday and ending on a high note, which is a good thing. Secondly, the ratio of Insider Buying to Insider Selling was significantly higher today. This has not been the case for weeks. Also there seemed to be a positive reaction when it was announced that Sen. Chris Todd said there were no votes from Republicans in favor of a rescue for the Auto makers. I do not agree with the Republican rejection of a bailout. I have clearly stated a number of conditions for a bailout, the first being GM files for bankruptcy and the shareholders lose their investment, management loses their jobs and their is a government oversight of the company with conditions favoring more environmentally responsive measures.

Getting back to the market. We will stay between the low of 7,965 to the recent high of about 9,700. To make money you will need to play the range and when the Dow Index approaches either end of the band, take an action to buy or sell. I tried to sell my Shorts but failed to do so. I should have had an order in that executed without my need for a manual trade. I learned my lesson and it won't happen again. I also was preparing a trade to Buy an Ultra Long ETF of the S&P500, symbol SSO, but I didn't make it in time. Lesson learned, move on. :yeah:

Market update - Where are we going short term?

It looks to me reading the charts we are still headed lower short term. For the Dow that means going back to 8,000, for the Nasdaq it means 1500 and for the SP500 it means 850. That's about another 8% drop from here. That is the bottom of the range we hit in this Sept./Oct crash. We will bounce off these lower levels but will be testing them. Don't be fooled again when they bounce back up, as we will drop down on the Dow to about 7300 before we can truly say we are at bottom. That is where real capitulation is and I have been saying this for a couple of months now. So on rises sell, and repurchase at the lows of this band. The Dow will stay in this band of 8,000 to 9,700 for a long time or until we go down to the 7,300. If we do that money will come back into the market on much heavier volume than has been attracted back. However, longer term, volume will be a casualty of the market crash and loss of confidence in Banking, Insurance and the Government.

Bill Seidman, the man who was in charge of the Savings and Loan rescue plan back in the late 1980's, early 90's, was asked on CNBC this morning, when he thought this Mortgage crisis will get resolved. He said he hoped maybe by 2010 but there was serious doubt it would be resolved by then. That means we are in for a turbulent time.

Making money in the stock market is only going to come with increased trading in positions for smaller percent gains. You can get 5% gains with this volatility but then you must consider taking your profit. Hedging with Shorts is also something that can help stabilize the large moves. But those too must be traded when gains appear. The days are gone when the average investor hoped for a 8-10% gain in a year. Be happy now with 3-4%. That will be terrific if you don't have the time or skill to trade.