Just as yesterday, don’t let the title fool you!  Something exciting actually happened in the put/call ratio, for the first time in 10 days!!!  And it’s doubly exciting as it doesn’t quite make sense!  So without further ado, let’s hear it for the return of the $CPCI chart:

As we see, the put/call ratio jumped 67% today to 1.67!  Highest reading in over a month!  Holla!

Since we’re rolling with the theory that this ratio is a contrarian indicator (at its extremes), this signals an entry for going long, e.g. buying some SPY May/Jun calls.

But back to the ratio…the doubly interesting part about it is the timing of this reading.  One would expect to get such a bearish number at the bottom of selloff – everybody finally capitulates and positions themselves for a crash – not after a gynormous 2-month rally.  Which brings us to the interesting possibility that the (index) options players could be right!  Which obviously defeats that purpose of using this as a contrarian indicator.

I think part of the problem lies in the fact that I’m using the index put/call ratio.  Since index options are mostly used for hedging by institutional traders, it definitely makes sense to see an increase in hedging via puts if the institutional traders are protecting profits in anticipation of a top.

So I guess we’ll see what happens out of this – an interesting test to see if the institutional players are ‘right’.

However, regardless of the outcome I think this ‘indicator’ will need some revision.  Been thinking about this for some time now…but despite my initial dislike for it, I might switch over to the equity put/call ratio – potentially tweaking it by subtracting out the ‘faux’ equity ratios (such as the QQQQ).

For reference, here is the $CPCE…paints quite a different picture:

Or better yet, develop some sort of combination of both (rather than just the ‘total’ put/call ratio that the CBOE puts out).  Surely a correlation between the institutional players (index put/call) and the speculators/herd (equity put/call) would tell us something meaninful?

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As I got a fairly late start on this, there will be no ‘individual items’ update for the 2nd straight day…apologies, for those who care.

The reason for this is the 2nd part of this post’s subject – The San Francisco International Film Festival.  Going to film festivals is a long-standing tradition for me, having attended at least 1 showing each of the last 13 years (both in Seattle and SF).

Initially this streak started out as an attempt to ’stay in-touch’ with the culture of the ‘homeland’ and only grew in stature as I realized that it’s also a great opportunity to watch and discover ‘hidden gems’ and non-Hollywood-standard movies.  Over the years, I’ve seen features such as Trainspotting, Crouching Tiger, Hidden Dragon, Sunshine (both the Hungarian and the amazing sci-fi flick), District B13, Layer Cake – all before their major theatrical runs.  And while Seattle tends to get more ‘big’ movies, SF does a cool ‘retro’ release each year as well, such as fully restored copy of Butch Cassidy & the Sundance Kid and Once Upon a Time in the West this year, or Chinatown a couple years ago.

Anyway…went to see my first movie this year, the US premiere of Rudo y Cursi, starring my 2 favorite Mexicans:  Gael Garcia Bernal and Diego Luna (who, along with the director, was there for a meet & greet Q&A afterwards – another advantage of film festivals!), as well as the hottest woman in Mexico:  Jessica Mas.

Playing 2 brothers, Bernal & Luna, reunited for the first time since Y Tu Mama Tambien, bring the goods, (as expected) and the movie is enjoyable through & through.  The story moves along at a quick pace and is never boring.  Tension abounds (both sibling- and plot-wise).  Don’t expect a typical happy Hollywood ending, though!  A warning to the JakeGint-types:  the movie is high on ‘futbol’ content – I enjoyed this very much (especially the somewhat unique way of presenting it), but others may not.

That is all.  TGiF, bitchez!