Equity Put/Call Ratio Has Spiked

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The chart above shows the equity put/call ratio with a 3 day moving average in blue. It has spiked to the highest level since Nov 2008 and is right at that level now. Other times the ratio spiked like this it led to immediate reversals higher. However, those rallies eventually failed and moved to new lows. Since the indexes are near support from the March lows right now, it may be reasonable to expect a rally here to form what looks like a right shoulder on a head an shoulders formation. It would make sense to do that , and then break the neck line at least briefly even if it then continues higher.

There is a little divergence the last couple days on the NYSE McClellan Oscillator suggesting improving breadth. It is not the major kind seen before large moves up, but still suggests a rebound is probable.