Wednesday, March 25, 2015

Sell Warning From Total Put/Call Ratio

Click on Chart of Total Put/Call Ratio to Enlarge

I haven't had time to provide more detailed info on this, but Monday the total put/call ratio gave a sell warning with the 5 day average closing below the 20 period 1 standard deviation band.  I have discussed this signal quite a number of times here in the past, and you could search the blog for related terms to find more info.

Interestingly, this signal came at a slightly lower high in the SP500.

I will try to provide more detailed info here in the next day or two.

Currently I feel the two most reasonable price scenarios are for a continued rally to new highs as suggested in the recent video on an ending diagonal in the SP500 OR for weakness into the end of the month followed by a rally to new highs in May, which could also be the end of an ending diagonal if the price relations remain within the rules of logic for such a pattern.

The most recent signals from the ratio mentioned above were

  • 12/26/14
  • 12/26/13
  • 7/19/13



  1. Hi Pete, following your resent posts I saw some opportunity to short DJ30 2 days ago and took the plunge. Currently my positions are highly positive but as the overall market is still bullish I am thinking about possible exits. Do you think that DJ30 and S&P500 might break the low levels from 3/11? Daw already broke it's MA100 and S&P/Nasdaq are about to do it today I believe.

  2. It appears probable to me that the 3/11 or 3/12 low will be broken based upon the speed of the current decline. Looking at overnight SP500 futures, the decline came within a couple points of those lows. Additionally, there is no bullish divergence on the hourly chart technical indicators or in my daily time frame bottom spotting algorithm. So I feel the odds favor at least modestly more decline. I will create some follow up here. And I assume that you must use a stop on your position, but would advise a protective stop above Monday's high as you allow this potential decline to unfold in your favor.

    Keep up the good work!