Rare Total Put-Call Ratio Signal Setting Up

By Lawrence G. McMillan

...Equity-only put-call ratios temporized yesterday, moving slightly sideways, but they remain on sell signals as they generally continue to be in an uptrend. An interesting piece of data has arisen on the Total put-call ratio, though: its 21-day moving average is now above 0.90. That is an oversold condition that is a predecessor to what is normally a very strong buy signal. The buy signal will occur if either a) the 21-day MA moves back below 0.90, or b) the 21-day MA makes a peak that lasts for 10 days. At this point, this is not a buy signal, for the market could decline and the Total put-call ratio could continue to rise for a while. But it does mean that we should be paying close attention here...

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