Thoughts
1 am: The Total Put/Call Ratio just spiked. A short term bullish sign for the stock market.
The Total Put/Call Ratio just spiked to 1.32
*The Total Put/Call Ratio combines equity and index (e.g. S&P, Russell, Dow, Nasdaq) options.
This suggests that the stock market’s short term potential downside is limited, and that the short term is becoming increasingly bullish.
The last 2 times the Put/Call Ratio reached this level were February 9 and March 23, both of which were short term bottoms in the stock market. Here’s the S&P 500.
What’s also particularly interesting is that the stock market needs to fall less and less to achieve these bullish contrarian extremes.
I see this as a sign of medium term bullish price action.
1 am: Sentiment suddenly became extremely bearish. A short term bullish sign.
AAII Bears suddenly spiked to 40.8%. The last time this happened was April 12, right after the stock market had put in a short term bottom.
As with the Put/Call Ratio, what surprises me is that the stock market only needed to fall a little this month (-3.5%) for sentiment to get so bearish. I see this as a short-medium term bullish sign in terms of price action.
