Just after the SPX 3/23/18 bottom I posted that there were many bullish signal indicating a bottom could be in place. I also noted that the strongest signal came from the CBOE Put/Call ratio.
Note on this chart that whenever the Put/Call ratio decisively exceeded the 1.40 level it was a great time to go long the SPX. I think there's a very high probability the 3/23/18 signal could also be a great time to go long the SPX.
You must expand your horizon beyond just price pattern analysis. There are four market dimensions that must be studied; Price, Time, Momentum, and Sentiment.
For the US stock market Sentiment in the form of the Put/Call ratio is very bullish. In the Time dimension the US stock market is seasonally bullish into May.
A powerful sentiment signal in a bullish time period strongly implies rising US stock priced for the next several weeks.
My next post will have my updated long term forecast for the US stock market.
Go to the "Compare " tab above the chart field then type in PC - this is the symbol for the Put/Call ratio. After the line chart is up - click on the line an this will reveal an menu- chose either
place above or below the main chart which is being comapred.
With all respect, we believe that your observation is subjective, therefore please be so kind as to find out what substantiate our conclusions thanks warm regards from Sydney Australia yours Seven. >>>>> goo.gl/ecuxh2
hawkowl
⋅
This is a helpful post, but the ratio is not over 1.4 RIGHT NOW. If you use your chart, a .95 ratio after peaking above 1.4 indicates next week should be further down. Not a new low perhaps, but at least testing near the 3/23 low. After that one may consider going long.
markrivest
⋅
Hi @7wilberforce,
Why is my observation subjective? The P/C spike came right at the Oct 2015 mini crash bottom. The SPX then rallied 13.3% into November 2015.
The January 2016 P/C spike came at the SPX January 20, 2016 bottom there was an initial small rally then on February 11, 2016 the SPX had a 2 point breach or 0.10% of the January 20th bottom. This tiny breach is well within the stop loss zone of even very cautious traders. This double bottom was the start of a multi month rally. The November 8, 2016 P/C spike was the start of an even bigger multi month rally.
Objectivly looking at this evidence leads to the conclusion that going long the SPX after a P/C spike over 1.40 is the correct action.
Mark
hawkowl
⋅
@7wilberforce, All observations are subjective. Next you'll be telling everyone that water is wet.
Thanks for posting this - I have been looking for a CBOE Put/Call Ratio overlay. How do I add the bottom part of the chart to my own chart?