Props to the excellent SentimenTrader service for the catch on the rise of bearishness yesterday, particularly in the morning trade. The CBOE equity put/call ratio, calculated for each half-hour period, exceeded 1.0 in mid-morning; by the end of the day, it was a still-elevated .78. As the chart shows above, that is territory more recently associated with market bottoms than tops.
It is this bearishness that is helping keep prices relatively elevated as we correct. If such a flat correction continues, keeping us above last week's Thanksgiving lows, I would expect a sizable move to new bull highs in stocks.
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1 comments:
Hi Dr S,
This spike feels very different from the others on the chart. Put/Call spiked after a threat to a prior low. This one, sitting on a "mesa" strikes me more as a profit lock-in than a position protection. I didn't listen to Fast Money yesterday and hear what the option guys were thinking (I don't DO options--not smart enough, but they have three very talented team members who have useful insights into option sentiment).
I will learn something from yesterday's spike in the ratio.
Dr K
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