Technical Analysis - Calculated Statistical Indices index, copyright, recently, question

spartan1

Hi I have found a discrepancy between a third party prep provider and the curriculum. I have changed the question around to avoid copyright issues.

Market technician Simon Grey uses the CBOE put-call ratio as a contrarian indicator and Barron's confidence index as a smart money indicator. Given that both of these indicators have recently risen sharply, her market outlook based on each indicator is most likely:
Confidence Index Put-call ratio
a) Bullish Bullish
b) Bearish Bullish
c) Bearish Bearish

The answer was A. However how is this so.

In reference to the curriculum book

" The put/call ratio.......The ratio is considered to be a contrarian indicator, meaning that higher values are considered bearish and lower values are considered bullish".

Whats the go here? Should I stick with what's in the curriculum?.

Thanks

trogulj

For a contrarian, a high put-call ratio would be a bullish indicator.

High put/call means essentially that the market 'bearishness' is already being priced in. A contrarian would be seeking to take advantage of those low prices, and thus would take a high P-C ratio as a bullish signal.

kmf229

Oyster Wrote:
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> @anish,
>
> Is this in Volume 1 or in the derivatives volume?


Hey Oyster,
Its in Vol 1 technical analysis reading...

evolsteevol

I can confirm Cinderella's claim - I haven't seen this in the 2011 curriculum. I finished the reading on technical analysis (V1R12) a few weeks ago, and don't recall having seen "put/call ratios."

Unless this is in the derivatives volume!?



Edited 1 time(s). Last edit at Saturday, April 23, 2011 at 01:04PM by Oyster.

MonkeyBusiness

This stuff is from the 2010 technical analysis reading if I am not mistaken. I am pretty sure follow the smart money indicators were in the reading last year, but don't recall seeing them this year.

Are these last year's questions? Whose questions are these anyway?