Just two days after an epic feast, option investors started the day Wednesday by gorging on calls again (in fact, they seem to be swallowing them whole). As a result, the TOF Ratio is printing a HUGE spike this morning. While this is an intraday chart and not worth the paper it's printed on, a close anywhere near this hot would be considered a tad contrarian bearish.
A check of the ISE Sentiment Index shows that it's seeing the same thing. While the TOF Ratio's divisor -- the CPC -- combines both index and equity options, the ISEE uses just equity options and more closely resembles the CPCE. A critical thing to remember with both of these charts and that they're prone to enormous intraday swings, more so than most charts you'll run across. Bear that in mind, say...at about 2:15pm.
Speaking of the FOMC statement, in addition to TOF's chart list, I've parked a live TOF Ratio here, and the ISEE is live here.
From the Department of Perfect Timing, Bill Luby pointed out this morning that the CXO Advisory Group has published an analysis of the P/C Ratio as an indicator. You should read the full article, but their conclusion is that -- used on its own -- CPC is "not a useful indicator for short-term or intermediate-term trading." OK, I feel so much better.