What are the best stock market indicators? Is the total put/call ratio a good indicator? How do you use it?

Answer 1

I like the put call ratio as an indicator if we are not in options expiration week. A put call ratio of over 1.12 generally means the market is going to go up. A put call of 0.75 to 0.60 generally means the market is about to go down. A put call ratio of 0.4 of less means the bulls are on a stampede and the market is going to continue to rise rapidly and then drop like a rock.
Just my 2 cents.

Answer 2

The put-call ratio attempts to quantify whether investors believe the market or an individual stock's price will drop. A high ratio of puts to calls indicates that investor sentiment is largely pessimistic. People who are buying puts, because they believe prices will fall, outnumber the people buying calls, who believe prices will rise.

Technical analysis says that a stock is likely to go against this sentiment, meaning when the put/call ratio is high, that is a bullish sign, and vice versa. One of the pioneers of this thought/stratagy is Ralph Bloch, a regular on the talking head circut.

Answer 3

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Answer 4

price is the indicator. everything else either confirms the action of price or suggests that the current price action may be about to end.

that said, if market trading was easy, we'd all be rich already. Since our forefathers weren't rich, trading must not be easy.

the only indicators worth anything are the ones you've personally researched and found to be predictive of a statistically reliable probability that you can make money if you do X.

I say "personally" because if you buy anything from anyone else you need to know that the anyone else has to sell his ideas thousands of times in order to make enough more than he could by simply trading his ideas -- so it follows that there are thousands of wanna be traders out there following every idea that has been sold -- and they're overwhelming the niche opportunity the original guy found so there isn't any profit left in it.

recommended volumes below, so that you don't end up simply giving your captial to me :-)

[disclosure -- i've read and use these ideas but do not own them nor profit from the sale of the books.]

Answer 5

Hi, I have a masters in finance, and after 18 months in the industry, i'm now 2 months shy of med-school.

Please know that in the world of investing, all traders, as a whole, earn the "average" rate of return of the market.

The only reason some super-gurus make 20% and 30% rates of return on large amounts of capital are because their extra profits are subsidized by people who made LESS THAN the "average" rate of return of the market over the same period.

I left the industry of finance because it is an industry of sales. My firm charged a 1% fee on a customers account per year (which is the norm--the best exception is VanGuard who is low-fee).

There is a simple element of logic which irrational investors ignore. As a whole, all investors, on average, earn the market rate of return for any asset or group of assets, during ANY time period analyzed.

By your decision to become an active trader assumes that you are "smarter than average" of investors.

Do you know that my firm had personnel who were making a KILLING off of derivitaves/hedge funds/commodity futures at PEOPLE LIKE YOUr expense.

And guess what, these very bright individuals were using clients money of 100s of millions of dollars and earning between -30% to +200% per year, for their clients, and were charging a variable fee of 20-28% of the gross profits.

These guys are paid a $200,000 salary at my firm, plus 1% of revenue plus 3% of revenue for new clients.

Guess what they do all day???

They are on the phone constantly, I was hired because I networked in through one of these moguls.

As a warning to you, you can not possibly be better at this person's job than you. And guess what? YOU SUBSIDIZE HIM. He flat out said, that the rule is YOUR EARNINGS REFLECT YOUR QUALITY OF INFORMATION.

The smartest investors in the world, are hired by top firms, and THEY make the killing.

Create a play-account, before you invest real money.

Will you listen to me? No. Humans are devoid of skepticism and rationality. If you do listen to me, then I pray in thanks that I turned one person away from losing tons of money.

Also, I answered this question just about right after it came out--but you'll get lots of spammers answer your question and support your belief that "making easy money is possible".

Please, if not listen to me, print this out and bring it to a Certified Financial Planner, or any reputable financial planning company.

Thanks and god bless, I'm not selling you anything, just sharing my personal experience.