Looks like the CBOE Equity Put/Call Ratio is at extremes again – we measure extremes based on Bollinger Bands and as of now we are clearly outside the upper band. This means the Put/Call Ratio is very high relative to the past 20 days or that FEAR has reached an inflection point. The CBOE Equity Put/Call Ratio simply looks at the number of equity puts (bearish) traded compared to calls (bullish) traded, it's falls lower as market participants become more bullish and vice-a-versa climbs higher as participants become more bearish.
Market reversals tend to occur when fear and greed saturate the markets. In today's case we are seeing an extreme amount of puts traded, so much that it is unhealthy for the current trend. Take a look at the graphic below to see recent patterns with the Equity Put/Call Ratio and the S&P500. Also, don't forget to watch the VIX it's been a fast climb, but it too has reached the upper Bollingers signaling a probable market reversal back higher.
CBOE Equity Put/Call Ratio
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