ISE Sentiment index hits dangerous extreme

An interesting tidbit from regarding the ISE sentiment index which just today hit an extreme level. This is a very interesting call to put index which excludes trades from market makers and thus gives a better indication of investor sentiment compared to other put to call ratios. The index today recorded a reading of 2.76 which means that investors/traders are buying 2.76 call options for every put option. This usually means complacency within the market. You can see from the chart that this index rarely goes above 250. An important note regarding this index is that it is a short term trading indicator and does not indicate major inflection points in the market. This further reinforces by short-term bearish stance right now.

Chart from

Black Swan Insights


1 comment: