The Big Question: Have We Bottomed or are We About to Crash

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Stocks continue to hammer new lows as the “wait for the bounce” crowd begins to gain numbers.

We continue to see the anticipation for a relief rally build as the market continues to slide further into this Bear Market. This is being played out in sentiment numbers as well as my favorite [for now] ratio: put/call. It shouldn’t come as a major surprise there is a disconnect, the market “looks” quite oversold but in reality we aren’t as nearly as oversold as you might think. Do not be mistaken we are oversold, but oversold conditions can deepen and last a very long time. The battle continues in the stock market and its actions are speaking louder than words.

Sentiment indicators are pointing at near record levels of bearishness. I point out a phrase my mother used to say over and over: “actions speak louder than words.” Therefore, although we have a significant bearish indication from sentiment readings are those who are responding acting bearishly in the market? This is where my lovely equity put/call ratio kicks into gear. Yesterday, the S&P500 closed at a multi-year closing low along with the NASDAQ composite index. Yet, taking a look at the equity put/call ratio we see that it FELL to a .58 reading. Option traders are desperately buying equity calls to “catach” a bounce. This ratio also indicates to me that we have yet to see the bottom in the market as we have yet to see FEAR and PANIC strike at our lows.

Big tech stocks are rolling over once again, notably GOOG and AAPL look terrible. If these breakdown further it will spell trouble for the NASDAQ.

Cash continues to be king, although the rate at which the Treasury is printing US Dollars Cash may lose its color.

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