Smoking Securities

Half Baked High Finance

Ratios to Reason $SPX

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In an effort to create more structure for this blog, I’m re-posting 5 charts that depict various trends within the $SPX. In the future this selection will be posted during the weekend.
$BPSPX:$VIX = 139.61
$BXM:$SPX = 68.88
$CPMKTE:$CPMKTB = 41.34
$SPXA50R:$VIX = 122.16
$SPXHILO:$VIX = 10.9

Why am I regurgitating this mass of pretty but confusing information? The charts represent aspects of the market that are not revealed by the price of the SPX. 3 of the 5 graphs relate percentage:volatility, and currently they are bearish, trading in downtrends towards 0. If you’re buying stocks, it’s prudent to wait for a growing number of bullish stocks trading above the 50dma making new highs.

The other two illustrations are a bit more conventional. One measures the spread between a buy write strategy and the underlying index, creating an inversely correlated derivative of the SPX. Lastly, $CPMKTE:$CPMKTB is the relation between US Equities and US Bonds, useful for discerning the appetites of investors. Both of these indicators are signaling more downside to come.

In time, I hope to find a better method of aggregating the information presented in these graphics. Any suggestions towards such an end would be greatly appreciated.

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Written by chucklesamadeus

January 12, 2009 at 6:52 pm

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