Tags: VIX | CBOE | shutdown | sentiment

Shutdown Making It Difficult to Analyze the Market

By    |   Tuesday, 15 Oct 2013 07:47 AM

With the government shutdown entering its third week, it is becoming more and more difficult to analyze the market.

Instead of trading off of technical, fundamental or sentiment factors, the market is moving based on the latest rumor out of Washington. And if you can analyze what the politicians in Washington are going to do next, you are a better analyst than I am.

Just look at what the market has done since last Wednesday, when a rumor surfaced that a deal between the parties could be in the works. Since the low at midday on Wednesday through the close on Monday, the Standard & Poor's 500 has gained 3.87 percent.

The fact we are trading on rumors isn't the only problem either. Because of the shutdown we aren't getting all of the economic reports that we were scheduled to get, and the Commodity Futures Trading Commission hasn't published a Commitment of Traders report for two weeks now.

That leaves us with the three main sentiment indicators I watch with regard to overall equity market — the CBOE Volatility Index (VIX), the Investors Intelligence Report and the 21-day Moving Average on the CBOE Equity Put/Call Ratio.

The VIX has been all over the place in the past week with the wild swings in the market. Last Wednesday, the indicator moved above 21 for the first time since June, but it had dropped back below the 16 level by the end of the day Friday.

The 21-day moving average on the CBOE Equity Put/Call Ratio rose as high as 0.6171 on Thursday, the highest it has been since July. The rising put/call ratio is indicative of more fear from option traders.

Meanwhile, the Investors Intelligence Ratio did fall slightly in the past week, as the bullish percentage fell and the bearish percentage increased slightly. The ratio is still at 2.2, which is leaning toward too much optimism.

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With the government shutdown entering its third week, it is becoming more and more difficult to analyze the market.
VIX,CBOE,shutdown,sentiment
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2013-47-15
Tuesday, 15 Oct 2013 07:47 AM
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