Put/ Call ratio saying a move down is right around the corner !
- There is a zone for the put/ call ratio of 0.74-0.8.
- Historically, this is a zone from which corrections in the market have initiated. (blue arrows)
- There are instances where complacency gets extreme and the ratio drops to new lows but significant corrections have followed in the near future (red arrows)
- Currently, you can see the ratio has been in the zone for almost 3 weeks and a correction seems to have begun in the broader market but not yet SPY & QQQ
- Typically, once the ratio gets in the zone, IF a correction has to take place it happens within 1-2 weeks so if something has to happen my timeframe is the end of this week or the trade loses its strength
- I have a cycle analysis as well as a vix analysis (see related ideas) which makes this week significant
- Historically, this is a zone from which corrections in the market have initiated. (blue arrows)
- There are instances where complacency gets extreme and the ratio drops to new lows but significant corrections have followed in the near future (red arrows)
- Currently, you can see the ratio has been in the zone for almost 3 weeks and a correction seems to have begun in the broader market but not yet SPY & QQQ
- Typically, once the ratio gets in the zone, IF a correction has to take place it happens within 1-2 weeks so if something has to happen my timeframe is the end of this week or the trade loses its strength
- I have a cycle analysis as well as a vix analysis (see related ideas) which makes this week significant
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The chart above is a smoothed put/call ratio with a 10d SMA to reduce the noise of daily movements
