As equities struggle to find support at their February lows, various measures of breadth and sentiment recently printed extreme readings,favoring a bounce in equities. The 13-day EMA of the put/call ratio, for example, has been over 1.10 since early May, suggesting continued fear, desire to protect gains and outright bearish bets. This indicator reached these levels in October 2008 (as equities swooned) in the midst of much more severe economic conditions. The dollar also appears to be forming a short-term top; its reversal may lend support to a short-term uptrend in equities. Oversold foreign markets also appear to be settling into support zones.
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- Robert Palmerton, CMT
- Bob Palmerton founded Baseline Analytics in October, 2005. Bob received his MBA in Finance from the University of Michigan, a BA in Economics summa cum laude at Fordham University in New York, and is a Member of the Market Technician’s Association (MTA) in New York City, where he was awarded the Chartered Market Technician (CMT) designation. Bob is also a member of the Technical Securities Analysts Association (TSAA) and the Detroit Metastock User's Group. In 2010, Mr. Palmerton co-founded The Absolute Return, LLC., an investment advisor registered in multiple states, offering investors a choice of several "absolute return" portfolios.
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