Put to Call ratio hits SELL signal low.

The Put to Call ratio has just hit a new recent low of 0.37 at 7:00am PST. This is flashing a SELL signal for anyone willing to pay attention to it. The stock markets are so overbought right now that, in my view, you buy stocks at your own peril. The last time I have seen it this low on a close for the day was when the Dot.com Bubble burst. Be alert and flexible. This Bubble is about to burst!

I will post the Put to call ratio during the day as the data is available, as I did yesterday:

7:00am PST 0.37
7:30am PST 0.49
8:00am PST 0.57
8:30am PST 0.60
9:00am PST 0.57
9:30am PST 0.61
10:00am PST 0.62
10:30am PST 0.62
11:00am PST 0.63
11:30am PST 0.64
12:00pm PST 0.65
12:30pm PST
1:00pm PST

Jan. 3rd mid morning comments on the stock market

As the Put to Call ratio had indicated last Friday, 12/31/10, the ratio came in at 1.37 and was a Buy signal. This morning the market surged up 125 points by 8:00am PST and the Put to Call ratio has now backed off to 0.59, which is almost a Sell signal. Look for the Put to Call ratio to be as low as 0.54 or lower to signal a Sell. This looks like very high volatility coming over the next few weeks.

Update: 9:00am PST
Here is the data on Put to Call this morning 1/2 hour at a time. I will update it for the whole day as the data comes in.

7:00am PST 0.73
7:30am PST 0.68
8:00am PST 0.59
8:30am PST 0.61
9:00am PST 0.60
9:30am PST 0.61
10:00am PST 0.59
10:30am PST 0.60
11:00am PST 0.64
11:30am PST 0.65
12:00pm PST 0.62
12:30pm PST 0.63
1:00pm PST 0.64

The Put to Call ratio on Nov. 5th was a sell signal!

As it turns out, as I said on my Blog back on Nov. 7th, the Put to Call ratio hitting a 7th month low back on Nov. 5th, was a sell signal. The stock market has been steadily dropping since then. In the first few days, the drop was modest and as each day in turn has elapsed, the drop has picked up speed. As is shown again below, the Put to Call ratio had been the signal back at the lowest blue point on the chart, on April 14th. The Dow closed that day at 11,123 and then it rose to the peak you see on May 20th. The Dow on May 20th was at 10,068, so you can clearly see that the low point was a sell signal for the Dow and other indexes. It had dropped over 1000 points.

The Dow chart below shows the movement so far. Note also on this 3 month Dow chart the number of Hammer Candlestick patterns which have occurred in the past 10 days.

The timing of this trough of selling is coming because of the looming decision many must make in the next 45 days as tax decisions and planning are going to force more selling. Why you ask, because the Bush Tax cuts are set to expire on Dec. 31st and it looks right now that Congress is not going to extend them because they can't get Republicans to compromise and allow it to be only extended for those making $250,000 or under. If you are a Republican, you want it extended for the wealthy too and that's the compromise they want Democrats to make. In either case nothing is going to be passed most likely before year end. That means folks are going to take profits now and that means selling pressure all the way up to Dec. 31st as it is a more favorable Capital Gains tax now than after Jan. 1st. It makes perfect sense and needed to take place after the election, when the results were known. The Democrats don't have the votes in the Senate to get something passed just for those make $250,000 or under, so the fighting and posturing will continue. It is a rich man poor man argument. What side are you on? Or have you fooled yourself and think by allowing them for all jobs will be created? I doubt that because jobs haven't been created in the Private sector for 9 years now and the tax cuts have been in place that long. Try another argument!

Market comments for Sept. 23rd (UPDATE)

Initial jobless claims were announced this morning. Expectations were for 440K claims and the number came in at 465K, so it was 25K higher than expected. The prior week's data was also revised up from 450K to 453K. Dow Futures dropped immediately from being down about -60 points to now being down -80 points.

Continuing Claims came in at 4.489 Million versus an expectation of 4.450 Million. This too was more than expected. The prior week's data was revised upward from 4.485 Million to 4.589 Million Continuing Claims.

Many of the Indexes have a Sell Confirmed reading from American Bulls from yesterday's close, such as the Nasdaq Composite, SP500, NYSE, Russell 2000, and others. The Dow Industrials had a Sell-If signal posted.

Gold is up 17.8% YTD and that is higher than most investments this year.

AT 7:00AM PST, Existing Home sales will be announced and updated here, as well as Leading Indicators. And tomorrow Durable Goods Orders will be released and New Home Sales.

UPDATE:
Existing Home Sales for August came in at 4.13 Million Homes. Expectations were for 3.80 Million Homes sold. The prior month of July's data was revised up from 3.83 Million to 3.84 Million.

Leading Indicators for August data was also released. It came in at +0.3% versus an expectation of +0.1%. The prior month of July, the data was +0.1%.

Put to Call ratio lowest close in 4 years

Yes, the Put to Call ratio closed today at 0.56, the lowest level in 4 years, as you can see from the chart above. When the Put to Call ratio is at an extreme low level, it can be a Sell signal. When it is at extreme high levels it can be a Buy Signal. It can also be a signal at this low level to increase short positions as a hedge. Maybe finally we are approaching the long awaited correction, or at least a leg down for a change. It was back in March 2006 that the Put to Call ratio was lower than today's close. Then it was as low as 0.35

Put to Call ratio hit extreme on Aug 21, 2009

From the chart above you can see that the Put to Call ratio hit an extreme low reading which hasn't been reached since before 1/2/08. The reading was 0.59 and it signals an immediate Sell signal. The last time it was this low was 12/21/07 and you remember what a bad year 2008 was in the stock market. The Dow was above 13,000 in Dec. 07 in case you forgot! Friday had concurrently the Dow reaching over 9,500, as I wrote in an earlier piece on Saturday. And the S&P 500 also went back up to 1020. These are all indicators this rally's surge has peaked. It is time to sell! If you own any of the Dow stocks, Monday would be a good day to unload them and get your profits and tuck them away in a safe place. If the markets continue to go up this week, the drop will be even sharper when it happens in my view. The market has been very frothy of late and it's the average guy who pays the ultimate price in this game, isn't it. Don't let it be you this time.