Friday, August 06, 2004

Originally posted at 2:24:25PM EST While we have clearly broken well-known support on most major indexes, there continues to be a real lack of concern among many of the gauges we follow. For instance, the sentiment gauge created by the ISE (one of the largest options exchanges) shows that customers so far today have bought to open 170 calls for every put. That is in stark contrast to the reversal day on May 19th, when a mere 92 calls were bought to open for every put. The all-exchange put/call ratio that we follow intraday is close to 1.0 (usually a sign of bearishness), but that could be due to one or two large trades in QQQ. Usually that is best sorted out after the close. Bottom line, we are below the support level I have been mentioning at 1075, and while we're holding a minor long position in our model portfolio, I don't think now is a good time to add. We could of course reverse up and close positive on the day, which would obviously be a huge positive, but so far that is not looking likely. The temptation is there to become longer as we fall, but until I see more "give-up" among traders in more of our gauges, I think it's best to hold off and let some of the dust settle. 3:33:44 PM