Connect with us

Hi, what are you looking for?

Stocks

Put/Call Ratio Is Telling Bears to Watch Out!

This morning on the Fox Business Channel someone made a point to mention how extreme the Put/Call Ratio has gotten. Typically I don’t pay a lot of attention to this indicator because it is hard to interpret, but when I looked at it this morning, it certainly provided a wake-up call. Our primary interest is in the CBOE Put/Call Ratio, but I have also included the Equity Put/Call Ratio because it is so far out of its normal range. To calculate the Put/Call Ratio, divide the number of puts by the number of calls. High readings indicate excessive bearishness, and the current readings are the highest ever. We can see on this chart that in the last five years prior high readings have occurred at important market bottoms.

Watch the latest episode of DecisionPoint on StockCharts TV’s YouTube channel here!

Historically, stand-out Ratio spikes tend to occur at significant price lows. Some exceptions below are: (1) the end of the 1994 consolidation, and (2) the extreme ratio reading in 2007 near the bull market top. Also, the Equity Put/Call Ratio has been at extreme highs for over two months. How and when is one supposed to act on that?

Conclusion: Current high Put/Call Ratio readings reflect extremely high bearish sentiment. Such extremes typically identify major price lows, and it would pay the bears to stay alert to their increased vulnerability; however, this indicator is not infallible or precise. Be careful regardless of your inclinations.

–Carl Swenlin

Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2022 DecisionPoint.com

Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

    You May Also Like

    Politics

    When George Santos mentioned his family during his congressional campaign, the New York Republican often reflected on the work ethic and strength of his...

    Business

    Two of Sam Bankman-Fried’s top business partners — a co-founder of the cryptocurrency exchange FTX and the former CEO of the hedge fund Alameda...

    Sports

    Kicker Alejandro Mata is following former Tigers coach Deion Sanders to Colorado. ‘Thankful to be committed and signed to the University of Colorado,’ Marta wrote on...

    Stocks

    SPX Monitoring Purposes: Sold long SPX 1/27/23 at 4070.56 = Gain 6.51%; Long on 12/20/22 at 3821.62. The top window is the cumulative GDX...

    Disclaimer: SecretCharts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 SecretCharts.com | All Rights Reserved