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It’s About the Volume!
March 18th, 2008 at 5:25pm · No Comments
One can always look at market turns and say – ‘Sentiment was so extreme then’ – and yet, there are many times when sentiment is extreme and the market doesn’t turn. In the case of put/call ratios, an extreme ratio often isn’t enough to usher in a corresponding turn. But the combination of an extreme ratio AND high volume usually is. I first made that observation when I was an options market-maker. Many times, I felt the market was close to turning and I wanted to be alert to that turn. However, the turn would come and go and I wouldn’t even notice it. Why? Because I was too busy writing up trading tickets amidst the heavy volume! The lesson has stuck with me.
Tags: Sentiment
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