This chart shows the historical relationship between the CrystalBull Put-Call Ratio Timing Indicator and the Put-Call Ratio, along with the S&P 500. The Put/Call Ratio is a measure of bearish or bullish sentiment in the market. A reading above 1.0 indicates that options traders are purchasing more Puts than Calls, in anticipation of the market falling in the near future. A reading below 1.0 indicates that options traders are purchasing more Calls than Puts, in anticipation of the market rising in the near future. The CrystalBull Put-Call Ratio Timing Indicator seeks to find overbought and oversold conditions based on trader sentiment.
NOTE: A high Put-Call ratio indicates a bearish mood among traders (which is a bullish indicator!), and vice versa. Thus, the Put/Call Ratio is a "contrarian" market timing indicator, meaning that a trader is bullish when the put-call ratio is high, and bearish when the ratio is low. A successful trader tries to buy low (in weakness) and sell high (into strength). Being a contrarian investor can be difficult psychologically, as it is counter to human nature. Our Put-Call Ratio Timing Indicator attempts to take the psychology and emotion out of the trading, by analyzing the Put Call Ratio via an algorithm, and displaying its current reading in standard technical analysis format.
( HINT: Click-and-drag left-to-right on the top chart (S&P 500) to zoom in to a specific date range. Double-click on S&P 500 chart to zoom back out. )