S&P to CBOE Total PUT-to-CALL Ratio signaling trend change DOWN
Following up from my last post which charted the Elliowaves since the Feb highs and which projected the end of the Bear Market Rally from March lows as likely having been today - implying the wave C drop to March lows is in process.
Here I have charted the INVERTED CBOE TOTAL Put-to-Call Ratio with the SPX Cash Index.
When the inverted TOTAL Put-to-Call ratio goes down it indicates increased Put buying i.e "Fear" and thus foretelling a drop in the S&P.
Conversely, when this ratio goes up it indicates Bullishness in the options market - with more call buying and thus bullish sentiment in the options market.
We can see that the S&P made a lower high on June 8th even though the ratio made a higher high (highest since 2013 as a matter of fact) compared to the Feb 19th all-time high in the S&P.
This divergence shows that bullishness was even more extreme on June 8th as compared to Feb 19th all-time highs and warning that extreme Greed had set in by June 8th - setting the scene for a coming trend reversal.
As we got to a slight new high today (compared to the June 8th high) however, this ratio made a lower high which is a bearish divergence telling us that options players are not convinced of the rally since June 15th lows and getting us far closer now to trend reversal.
Look at the ratio as compared to the index as the S&P was dropping in March (Green Up arrows).
We see as prices made lower lows the ratio made higher lows and soon after the S&P Bear Market rally commenced aggressively.
Options buyers were starting to buy calls as we got to the end of the Feb to March crash indicating they saw a reversal in trend coming.
Since June 8th we are now reversing this phenomenon and as prices made higher highs the ratio made lower highs.
This is also reflected in higher lows in the VIX with the higher highs since Friday.
Trend Reversal happened either today or is extremely close.
Stay short and sell rallies.
Cheers!
Cyrus
PS - check my last post link below.
Here I have charted the INVERTED CBOE TOTAL Put-to-Call Ratio with the SPX Cash Index.
When the inverted TOTAL Put-to-Call ratio goes down it indicates increased Put buying i.e "Fear" and thus foretelling a drop in the S&P.
Conversely, when this ratio goes up it indicates Bullishness in the options market - with more call buying and thus bullish sentiment in the options market.
We can see that the S&P made a lower high on June 8th even though the ratio made a higher high (highest since 2013 as a matter of fact) compared to the Feb 19th all-time high in the S&P.
This divergence shows that bullishness was even more extreme on June 8th as compared to Feb 19th all-time highs and warning that extreme Greed had set in by June 8th - setting the scene for a coming trend reversal.
As we got to a slight new high today (compared to the June 8th high) however, this ratio made a lower high which is a bearish divergence telling us that options players are not convinced of the rally since June 15th lows and getting us far closer now to trend reversal.
Look at the ratio as compared to the index as the S&P was dropping in March (Green Up arrows).
We see as prices made lower lows the ratio made higher lows and soon after the S&P Bear Market rally commenced aggressively.
Options buyers were starting to buy calls as we got to the end of the Feb to March crash indicating they saw a reversal in trend coming.
Since June 8th we are now reversing this phenomenon and as prices made higher highs the ratio made lower highs.
This is also reflected in higher lows in the VIX with the higher highs since Friday.
Trend Reversal happened either today or is extremely close.
Stay short and sell rallies.
Cheers!
Cyrus
PS - check my last post link below.
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