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<\/figure>\n\nThe CBOE Put\/Call (CPC) ratio measures investor sentiment (a contrary indicator) by taking the total volume of put options traded on a given day and dividing it by the total number of call options.<\/p>\n
Whenever the ratio spikes above 1.20, it indicates traders are rushing to buy put options and make bearish bets – which is bullish from a contrarian standpoint. When the ratio drops below 0.80, traders are aggressively buying call options and betting on an upside move – which is ultimately bearish.<\/p>\n
For example, last month – after the S&P 500 had fallen 20%, and it looked like the world was ending – the CPC hit 1.22. That coincided with a short-term bottom in the stock market.<\/p>\n
In mid-February, as the S&P was posting an all-time high above 6100, the CPC hit 0.70. The S&P 500 dropped 1100 points over the next six weeks.<\/p>\n
So, it’s probably worth noting the CPC closed at 0.70 on Wednesday.<\/p>\n
In other words, despite the S&P 500 trading 1000 points above last month’s low, and despite all of the overbought conditions we’ve shared with you in Market Minute<\/em> this week, traders were still jumping over themselves to buy call options.<\/p>\n It’s rare for the stock market to sustain any sort of rally when the CPC is this low. So, while investors might be breathing a sigh of relief that the market has rallied back from the tariff trade war decline, traders ought to be looking over their shoulders right here.<\/p>\n The CPC indicator is suggesting there’s at least a short-term decline in front of us – if not something even more severe.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark P.S.<\/strong> This market environment is the perfect playing field for my newly released Bill Payer strategy<\/a>… Because even when the markets are chaotic and volatile, you can use what I believe is the single best income-producing strategy to make upward of $400… in just one week.<\/p>\n And this isn’t a cherry-picked result. I’ll show you how to do it over and over again with one straightforward investment vehicle.<\/p>\n To check out how I put this strategy to the test by paying for an entire day’s worth of purchases around Miami, go right here<\/a>.<\/p>\n![\"Signature\"](\"https:\/\/files.jeffclarktrader.com\/global\/signatures\/jeff-clark-signature.png\")
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\nEditor, Market Minute<\/em><\/p>\n