Low Equity Put/Call Ratio Today - Has Meant Trouble Before

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The equity put to call ratio came in today at 0.47. This makes 4 instances in the last 2 months that it has been less than 0.50, with no occurrences since the March lows other than those 4. The other times are shown above on the chart by the vertical blue lines. What has been typical has been for modest gains or consolidation for a few days followed by short pullbacks to support areas like the most recent unfilled gap up or last swing low prior to the low reading.

The last instances of such low readings prior to these were in the last stages of the bull market basically. The last two were a few days prior to the July 2007 highs and a few days before Christmas 2007. Both made small gains for a few days followed by severe declines.

The interesting thing here is that most of these readings occurred as a rally was making fresh highs. This time the market is below recent highs. My take is that this would be negative for the market even more than the last few readings. Anyway, this reading makes me feel more confident about the current SPXU trade. Also, I think it is quite reasonable that if the general pattern is followed again, that the S&P will push to new lows below 1020 from Friday.

If you didn't get filled on the SPXU trade today, then I would suggest placing either a market order for tomorrow morning or you can use the same limit order of 44.50 and same stop of 42.50 (but may not get filled).