Fear & Greed vs. Panic
Several years ago I designed a day trading system for the stock indexes based on the following assumptions:1) Bulls favor an orderly, steady march higher. This can be seen in a. Smaller daily ranges as the market climbs. b. Declining volatility. (less daily variance). c. Declining put/call ratio. (less desire to purchase downside insurance)
As this story builds, complacency shifts to greed. Bulls are less likely to buy put options for fear of giving up top end growth. The television’s pundits tell us why “This bull is different.” John Doe …