Thursday, June 3, 2010

Yesterday’s Unusually Low ISEE Equity Number

Yesterday’s ISEE equities only closing value of 100 was sufficiently low that only once in the last year has there been a lower number.

Recall that the ISEE is a call to put ratio (or an inverted version of the more common put to call ratio) and that the equities only variant is probably the best way to tap into the options habits of the retail options trader.

The chart below goes back to February 2009 to highlight with a green arrow the only two instances where the ISEE equities only index closed below 100. Note that both instance occurred just prior to an important bottom.

In the current context, the fact that the low ISEE equities only number appears just after what I think may be an important bottom raises two distinct possibilities:

  1. SPX 1040 may not turn out to be a bottom…OR

  2. SPX 1040 has a very good chance of holding as many investors are still firmly in the bear camp and have yet to come around to the long side

For more on the rationale behind the second alternative, which is the direction I am leaning in at the moment, Checking for Athiests (and some of the other posts linked below) may be of interest.

For more on related subjects, readers are encouraged to check out:


Disclosure(s): none

blog comments powered by Disqus
DISCLAIMER: "VIX®" is a trademark of Chicago Board Options Exchange, Incorporated. Chicago Board Options Exchange, Incorporated is not affiliated with this website or this website's owner's or operators. CBOE assumes no responsibility for the accuracy or completeness or any other aspect of any content posted on this website by its operator or any third party. All content on this site is provided for informational and entertainment purposes only and is not intended as advice to buy or sell any securities. Stocks are difficult to trade; options are even harder. When it comes to VIX derivatives, don't fall into the trap of thinking that just because you can ride a horse, you can ride an alligator. Please do your own homework and accept full responsibility for any investment decisions you make. No content on this site can be used for commercial purposes without the prior written permission of the author. Copyright © 2007-2023 Bill Luby. All rights reserved.
Web Analytics