Technical Analysis - Calculated Statistical Indices

Hi I have found a discrepancy between a third party prep provider and the curriculum. I have changed the question around to avoid copyright issues. Market technician Simon Grey uses the CBOE put-call ratio as a contrarian indicator and Barron’s confidence index as a smart money indicator. Given that both of these indicators have recently risen sharply, her market outlook based on each indicator is most likely: Confidence Index Put-call ratio a) Bullish Bullish b) Bearish Bullish c) Bearish Bearish The answer was A. However how is this so. In reference to the curriculum book " The put/call ratio…The ratio is considered to be a contrarian indicator, meaning that higher values are considered bearish and lower values are considered bullish". Whats the go here? Should I stick with what’s in the curriculum?. Thanks

This stuff is from the 2010 technical analysis reading if I am not mistaken. I am pretty sure follow the smart money indicators were in the reading last year, but don’t recall seeing them this year. Are these last year’s questions? Whose questions are these anyway?

I can confirm Cinderella’s claim - I haven’t seen this in the 2011 curriculum. I finished the reading on technical analysis (V1R12) a few weeks ago, and don’t recall having seen “put/call ratios.” Unless this is in the derivatives volume!?

CBOE put/call ratio is there in technical analysis this year. But ‘Barron’s confidence index’ is not there. I would stick with put/call ratio being contrarian… Higher put/call means bearish…

@anish, Is this in Volume 1 or in the derivatives volume?

Oyster Wrote: ------------------------------------------------------- > @anish, > > Is this in Volume 1 or in the derivatives volume? Hey Oyster, Its in Vol 1 technical analysis reading…

Shit, now that I revisited it, I remembered it. Hello, “new material!” LOL. Covered this crap a month ago, and didn’t even remotely reflect on what you guys were discussing. Daaaymn. Talk about retaining this stuff when I get to volume 6.

Oyster Wrote: ------------------------------------------------------- > Shit, now that I revisited it, I remembered it. > Hello, “new material!” LOL. Covered this crap a > month ago, and didn’t even remotely reflect on > what you guys were discussing. Daaaymn. Talk about > retaining this stuff when I get to volume 6. lol… yup, retaining it all is terrible… I think other than Quant and FRA, most things go down easy but you just as easily tend to forget them…

For a contrarian, a high put-call ratio would be a bullish indicator. High put/call means essentially that the market ‘bearishness’ is already being priced in. A contrarian would be seeking to take advantage of those low prices, and thus would take a high P-C ratio as a bullish signal.