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Good morning Traders,

As we’ve been detailing, the markets have been correcting internally as index
pricing has remained stable.  When we get moves like Thursday’s, we ask the
question if this is initiating, or terminal (is it the beginning of a large move
lower, or the end of downside).

The wall of worry is being built.

Let’s run through some charts and I’ll show you what I mean:

qqq put call ratio

equity put call ratio

daily stock barometer - old

cumulative tick index

equity money flow

equity money flow 2


oil timer

So putting this together, yes, the markets are over bought, but with the
crowd predicting a significant move lower, prices are likely to remain higher –
until that fear turns to complacency and better yet, greed.

So instead of recommending PUTS, I believe we’re closer to recommending CALLS
for another advance into the end of August that will set up the next move lower
into the end of September.  Over the past 17 years of collecting and
interpreting this type of sentiment data, I feel I have a pretty good
perspective on markets.  But there are always wild cards.  A few
corrections have initiated in August, so we could see the same thing here.
Expiration is 8/18.  If anything, I’d expect prices to bounce into that
point and a top the week after.


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