Bearish Options Outnumbered Bullish Bets

Advanced Market Timing Experts Workshop 2011. Master Market Timing with the Leading Technical Analyst

Advanced Market Timing Experts Workshop 2011. Master Market Timing with the Leading Technical Analyst

Bearish options outnumbered bullish bets by the widest margin since the Standard & Poor’s 500 Index made its bottom this year, a sign that U.S. stocks may be due for a rebound, according to Birinyi Associates Inc.

The ratio of puts to calls on U.S. indexes increased to 1.15 on May 17, the highest in two months. Since the S&P 500 began its rally from a 12-year low in March 2009, the options ratio had risen or stayed above that level on five occasions analyzed by Kevin Pleines, an analyst with Westport, Connecticut-based Birinyi, who found that four of those times the market was higher a month later.

The S&P 500 resumed its two-year rally on March 16, when the ratio of puts to calls jumped to 1.17, the highest level since September 2010. The benchmark advanced 5 percent in the following month.

Technical analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

Read More at: http://www.bloomberg.com/news/2011-05-19/bearish-options-may-bode-well-for-s-p-500-technical-analysis.html

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