Contrarian Interpretation of High OTC-to-NYSE Volume | Exam Question Answer

Contrarians interpret high OTC-to-NYSE volume as implying investor sentiment

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If the OTC-to-NYSE volume is high, the contrarians interpret it as implying that investors are:

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A. B. C. D.

A

Since the OTC market is dominated by small stocks which are riskier than the large stocks on NYSE, a high OTC volume relative to NYSE (above 110-112%) implies that investors are bullish. Of course, since the contrarians bet against the market at market turning points, they will consider this behavior by investors as a bearish signal if the market is at a high.

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