This chart of the Equity Put/Call ratio is a regular feature of NFTRH’s Market Sentiment segment. It’s really a bit of a dullard as sentiment indicators go as others are more dynamic in their signals. But the point of this one is that the 10 week exponential moving average smooths out the volatility of the actual indicator.
We have in the past noted market changes when CPCE’s EMA 10 trend changes. For example, the most recent breakdown was in 2016 signalling a new bullish phase. But the “bear killer” came several months earlier with a big spike in market anxiety. You may recall those were the times of global NIRP and the coming Brexit hysteria.
Since Q4 2018 we have been asking whether or not the most recent spike in the EMA 10 was another bear killer. Please, when some analytical wise guy tries to enthrall you with a secret sauce indicator filter it out and realize that it exists within a constellation of indicators, some of which are at odds with others. This one happens to be for the bulls. But it could just be an ‘equal and opposite’ relief thing going on to balance out what was epic fear in Q4.
So we will proceed on, using the multiple indicators in the Market Internals and Market Sentiment segments (not to mention regular TA) to distill the view. But again, this admitted dullard of an indicator happens to have flipped constructive for the bulls as it stands now.
Final note: As in 2016, a “bear killer” could actually wait months to actualize into bullish market activity. i.e. there could still be bearish stuff ahead but the next low could be a final one for an extended period. Let’s see how it all shakes out. Again, it’s just one indicator.
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