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

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?

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.

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...

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.