I tried to use the put/call ratio for short term
timing. I never could make it work. It did explain the level of anxiety in the
market but I never could get rules developed to use it. It took a lot of time and I abandoned the
effort. In fact, it was then that I
decided to focus on intra-day trading solely.
But then again, here I am writing about swings.
I discovered this put/call ratio symbol on Stockcharts
recently and played with it. The dots are the weekly put/call ratio. Now ignore them. The blue line is the 20 day simple moving
average of the dots. The solid black
line is the S&P500.
The blue line shows trends.
You can see back in the later 2011 that the put/call moving average
responded to the mini panic. Then it
went on a down trend as the market resumed upward. You can see in 2014 the moving average was
sideways. You might say it was
transitional. In 2015 it is definitely trending
The S&P500 is sideways in 2015. You might call it transitional.