spi premium , page-2

chris

I have my own theories on SPI premiums that not all agree with.

It is not uncommon to see rounding tops or bottoms in the model which I guess seems logical as "decay" affects the situation. It doesn't always happen and premiums can stay elevated up to the day or two before expiration at times.

My view at the moment is that current premiums are within the range of a normal bull market.

The scenarios to watch for now are as follows.

If the market starts falling and premiums remain then the decline will continue till discounts appear constantly.

If discounts appear quickly with a decline then it is just a minor market correction.

If discounts appear without a decline then it is super bullish.

If the market continues higher and premiums remain modest, then all is fine till premiums become large and keep getting larger and then optimism is excessive and some large move on the downside is coming.

These principles have remained constant since the inception of the SPI in 1983 and I have no reason to expect them to change.