This Sentiment Reading Is Not Like The Others

Options data from the International Securities Exchange does not corroborate the frothy readings seen in most other sentiment measures.
We’ve mentioned several times in several different outlets that perhaps our biggest concern regarding the equity market presently is overheated sentiment. From professional active money managers to volatility traders to traders in bearish ETF’s and mutual funds, sentiment readings are registering either severe complacency or downright bullishness. This nearly unanimous optimism is what has us concerned.
And then there’s the equity options trading on the International Securities Exchange (ISEE).
Just when you start to think this stock ‘game’ is easy, you wake up and realize that the market’s ducks are never all in a row. There is always something, or a few things, that don’t fit with the rest of the data – or one’s analytical narrative. Such is the case with the ISEE. That is because, using a 21-day moving average, the ISEE Call/Put ratio is at its lowest level since its inception in 2006 – as in, ever. In other words, in 10 years there has never been a 21-day stretch that saw fewer calls purchased relative to puts.

This post was published at Zero Hedge on Sep 9, 2016.