In addition, it is almost a certainty that the Total put-call ratio is going to give a buy signal as well.
In addition, it is almost a certainty that the Total put-call ratio is going to give a buy signal as well. During the most recent 60-point market “correction” (if one can even call it that), in mid-April, the 21-day moving average of the Total put-call ratio rose to 0.947 on April 22nd. That was eight trading days ago, so by Monday’s close, this will be a buy signal unless the 0.947 level is exceeded (which seems very unlikely). As longer-term subscribers know, these are powerful buy signals, indicating at least a 100-point rise in $SPX. The one potential problem this time is that the high ratio was partly a result of the heavy amount of protective put buying that had gone on earlier in the year. Thus the 21-day moving average was already inflated before the mid-April correction pushed it to oversold levels. In checking back over past signals for this indicator, there were none that occurred after such a shallow pullback in $SPX (60 points). The nearest thing was a signal in February 2010 (after a 100-point market correction), and that was a successful signal. So, it appears that we’ll have to hold our nose a bit while acting on this Total put-call ratio buy signal.
Market breadth has advanced a lot with many very strong days since mid-April, although whenever there is a down day, breadth is quite negative. The net effect is that the breadth oscillators have remained on buy signals for about two weeks and are in overbought territory.