Total Put-Call Ratio System: Did a Buy Signal Just Occur?

By Lawrence G. McMillan

We have very well-defined criteria for determining a major Total put-call ratio buy signal. These are powerful signals, worth a 100-point rise or more in $SPX.  There have been twenty such signals since the year 2000, of which 11 have produced the desired 100-point gain, and three others produced smaller gains.  The total $SPX points gained from the twenty signals is +960.  So, these signals are not to be taken lightly.  

What happened this week was that the Total put-call ratio came within a whisker of an official buy signal.  The question is, “Can we count this as a buy signal anyway, or must we stay with the strict definition?”...

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