As outlined in today’s market outlook, the Total Put/Call Ratio has become very high at 1.32
I said I thought that this is a short-medium term bullish sign for the stock market. Here’s the data to support that claim.
This is what happens next to the S&P 500 when:
The Options Put/Call Ratio exceeds 1.3 (excluding overlaps in the last month), while the S&P 500 is above its 200 daily moving average (i.e. while the stock market is in an uptrend).
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As you can see, the stock market tends to go up in the short-medium term when the Put/Call Ratio spikes to above 1.3 while the stock market is still in an uptrend.
As you can see, the stock market tends to go up in the next 1 week to 6 months, even though the rally will be a choppy one. This suggests that the Put/Call Ratio is a bullish contrarian signal for the stock market right now.
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