CHARTs DU JOUR AND OTHER INTERESTING FACTS….!

The diagram above charts what is called the Buy To Open Put Call ratio in the US – which is a measure of pessimism and is thus interpreted on a contrarian basis, ie the higher it is the more bearish people are. This therefore means there is potential fuel for a rally. Looking at above, we can see how this works – as the 10 day average line falls you can see cllearly that it coincides with market rallies and vice versa as it rises. – it is charting the ebb and flow of fear and greed – everybody being fearful at the bottom and greedy at the top!

 

The chart in fact shows that the BTO Put Call ratio is now at its highest level since early 2009 – a point of major pessimism that sparked a rally of over 100%. 

Coupled with short interest in the US at 2012 highs and the AAII survey returning a continuing measure of rather more bears than bulls and the ingredients for a sustained up move remain in place. 

Stocks are cheap, particularly in the AIM arena and certainly within the Oil Explorers sector with many stocks now down 50-70% from their highs as this is a high risk and leverage heavy area of the market that suffers disproportionately in a down turn.

Below is a weekly chart of the Ibex (Spanish market) – it looks like a classic RSI & MACD set up on the bull side that when married with the current poor sentiment, plays perfectly into contrarian bulls hands…

Good luck trading this week – come what may out of Greece!

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