When The Tide Turns…

The bull run since mid October 2019 has been absolutely amazing rewarding savvy investors who owned and held QQQ, SPY and most popular tech stocks such as MSFT, AAPL, and GOOGL. However, this run has also created one of the mosts extreme readings on the equity put/call ratio.

The chart below shows the 50d MA of the CPCE and SPX for the last 5 years. The reading is now more extreme than those recorded in 2014 and 2018.

CPCE and SPX, 2014 – present

Therefore, I decided to review the entire history of this indicator. Here’s what I found: there were only 2 more extreme readings ever recorded and both led to substantial corrections.

CPCE and SPX, 2004 – present

My market model is still LONG but one day it will flip SHORT. I will be ready for that day!

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