Christopher Carolan, Editor On Time Update
16 November 2004 Pre Open
SIGNS
There are some extreme signs of a top at hand. My 3-day Select Put/Call ratio is at a very extreme level. More importantly, option volume has completed a spike top, and a divergent spike top at that. Long-term clients know that extreme put/call readings are most reliable when they are accompanied by high total option volume.
We are also at the maximum time on the solunar seasonal model, with three weeks of weakness anticipated here.
The stock rally continues to be fueled by the inflationary effects of the falling dollar. It will take a dollar rally to effect a stock reversal. Stocks have also benefited from the fall in crude oil The daily crude chart made a range-bust reversal to the upside, which upgraded our trend rating to neutral from down, another potential negative for stocks.
I want to go short U.S. stocks just below the sell net line on the 135 minute trend chart, which is at 1180.50. Go short is the December eMini futures trade 1180. Use a 10 point stop. The order is good until 2:00 PM EST on Wednesday (the close of the second 135 minute bar that day.)
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