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NYMO Extremes

 
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PostPosted: Sun Mar 25, 2007 7:16 am    Post subject: NYMO Extremes Reply with quote

The first chart is a daily NYMO (red dotted line and right scale) and daily SPX (black line and left scale) three-year comparison chart. The second chart is a weekly SPX three-year chart, with 10 & 40 week MAs and volume, which can be compared to SPX in the first chart. SPX rose over 49 points last week, which was its best week in years.

The first chart shows the daily NYMO fell to roughly negative 100 three times recently, in Mar '07, Mar '05, and May '04. Typically, when NYMO falls to negative 50, SPX is severely oversold. After the Mar '05 and May '04 NYMO lows, SPX rose to lower highs and then fell to lower lows. After the Mar '05 NYMO low, SPX reached a lower low in Apr '05, and after the May '04 NYMO low, SPX reached a lower low in Aug '04. Consequently, SPX may fall below 1,380 in or before Jun '07, although only two prior observations aren't statistically significant, which often don't make a difference in the stock market.

However, the third chart shows CPC (CBOE Put/Call) is extremely SPX bullish, while VIX is roughly SPX neutral. CPC suggests an SPX pullback will be limited, or a volatile range will take place, and then SPX will rise to new highs.




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