Market sentiment from a contrarian perspective is still running on the bullish side on one of my
favorite measures -- the equities only put / call ratio. $CPCE
When the 30 day m/a of the equities put / call starts running above the .70 mark, it is often an
indication that traders are growing too bearish and that it makes sense to look for a market rally.
Such is what happened at the end of Oct. this year when the market sharply reversed to the
upside following a genuine price correction, and I note that sentiment despite a strong rally is
still very subdued on 30 day m/a. Also, I note the 200 day m/a of the put / call ratio is rising
toward the .70 level. The last time the 200 day m/a for this measure rose sharply toward the
.70 mark was in late 2011 when it presaged development of a powerful up-move in the SPX.
Sour sentiment can get more sour, but I would at least make a note that we have not seen this
kind of protective action by traders since the heavy pullback in 2011.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!