Tuesday 8 April 2008

Put Call Ratio and Other Observations

Put call ratio and other observations today. The Emini closed down 1.25 points at 1,371.00. Volume was very light at 1.4 million contracts and the range was only 10 points. We haven't seen a daily range of 10 points since early December 2007.

There were some positive developments today that support a long position:

  • Testing recent lows resulting in low volume and low range suggests "No Supply"
  • The previous support level of 1,362 held
  • Emini closed above the Hilbert sine wave resistance level, as shown last Thursday
  • Cyclical low turning points approaching in the 81 and 135 minute time frames

However, there are also some signs of weakness:

  • Better TRIN indicator was -55 today, showing underlying selling
  • Better TRIN Oscillator has now turned down
  • Put Call Ratio Oscillator has also turned down, see chart below

Emini Put Call Ratio Image

Put Call Ratio Oscillator (Emini daily)

I'm also looking at the US Dollar versus Japanese Yen for signs of the direction of the next move. As you can see in the chart below, we're at a possible cyclical turning point and previous resistance level. If the US Dollar starts to fall this shows funds are flowing out of the US markets and a down move is most likely.

Daily Yen Image

US Dollar versus Japanese Yen (daily)

I'm currently short from 1,379 based on my Better TRIN swing trading system and was hoping for a larger fall today. Since this is a system trade I will not override the signal and try and second guess the market. Good luck with your Emini trading.

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