Pull the trigger with confidence.

My predictive Timing Model signals for T-Bonds have said to look for a bottom early this week, and perhaps we have now seen one.  If so, bond prices will signal that by moving upward and turning up the Price Oscillator.  When I see that, I’ll change to a bullish stance, but for now this still looks like a downtrend underway. 

Tuesday’s CBOE Put/Call Volume Ratio was at a really low level of 0.684, the lowest we have seen since the highs in early January.  A low Put/Call Ratio means that options traders are comparatively more interested in trading calls than puts.  Calls involve a bet on higher prices, while puts bet on lower prices.  So a low reading like this means that traders are not particularly worried about the risk of a decline, and that thus we all should be. 

We have recently seen reports calling the January 2010 Summation Index high a “major divergence”, since it was lower than the prior high made on Sep. 22, 2009.  It is true that this is a divergence, since the price high was higher and the Summation Index high was lower, but the interpretive implications are not as dire as one might think.