Put Call Ratios Inverting

[SideshowBob]

Carl Swenlin of DecisionPoint has many times noted that the smart money players use OEX options, and they're usually correct (see http://www.decisionpoint.com/ChartSpotlite...20110oexPC.html). You can see the current put/call chart at:

 

http://www.decisionpoint.com/affiliate/pc.html

 

Note that the OEX put/call ratio is spiking higher, while the equity put/call ratio is spiking lower. When this type of event happens, it means the smart money is setting up for a top. It's not always all that useful (sometimes the top is followed by a 2% or less drop) but it's almost always correct. I noted today the equity put/call ratio is 0.40 while the OEX put/call ratio is again over 1.0. Although I'm sure the holiday mood is partly responsible for the low equity pc ratio, that can't be the whole story. And why isn't this mood affecting the smart money players? I know I'm preaching to the choir here, but be careful looking for too much from the long side.

 

It will be very interesting to see if the ratio inverts significantly or not. The OEX p/c ratio has not been above 1.25 for any length of time since March. If we can get above that now, that would be a big sign we're nearing a major intermediate term (possibly longer) top.

 

SB