{"id":24291,"date":"2025-06-13T07:30:00","date_gmt":"2025-06-13T11:30:00","guid":{"rendered":"https:\/\/jeffclarktrader.com\/market-minute\/?p=24291"},"modified":"2025-08-22T09:01:10","modified_gmt":"2025-08-22T13:01:10","slug":"lets-add-this-indicator-to-the-caution-pile","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/lets-add-this-indicator-to-the-caution-pile\/","title":{"rendered":"Let\u2019s Add This Indicator to the Caution Pile"},"content":{"rendered":"

This surprised me Wednesday…<\/p>\n\n\n

\"\"<\/figure>\n\n\n

This is the CBOE Put\/Call ratio. It shows the volume of puts traded divided by the volume of calls.<\/p>\n

The ratio usually hangs out near 0.90 – 0.95, because there are almost always more calls traded on any given day than puts.<\/p>\n

When it gets above 1.20 it means traders are jumping over themselves to buy puts. That often happens near the end of a decline phase, and it’s a good signal we’re near at least a short-term bottom for the broad stock market.<\/p>\n

When the ratio falls below 0.80, traders are excitedly buying calls \u2013 which usually happens near at least a short-term top. Indeed, the few times this ratio dipped below 0.80 in May, the S&P 500 pulled back almost immediately.<\/p>\n

It doesn’t surprise me the ratio is below 0.80 now\u2026 After all, I’ve been arguing that folks seem a bit too enthusiastic about the market. It surprises me that this happened on Wednesday.<\/p>\n

You might recall, on Wednesday the stock market opened higher. In fact, the S&P 500 traded as high as 6059. That\u2019s the highest we\u2019ve been since the market peaked in mid-February. But, on Wednesday, the bulls couldn\u2019t hold the gain. Stocks reversed midday, and the S&P closed at 6022 \u2013 down 16 points for the session.<\/p>\n

That action \u2013 opening higher and then closing lower \u2013 is generally bearish. It should have prompted some put buying, or at least cooled the heels of call buyers.<\/p>\n

Instead… traders were enthusiastically buying calls, as the market was falling.<\/p>\n

That’s a signal that investor sentiment \u2013 a contrary indicator \u2013 is too bullish.<\/p>\n

So, let’s throw this on the ever-growing pile of indicators screaming “CAUTION!”<\/p>\n

That\u2019s why, earlier this week I did a broadcast<\/a> about what strategy I deploy in these kinds of markets \u2013 that have led my subscribers to 19 winning trades out of 23 in my newsletters since April 2.<\/p>\n

You can access that talk until Monday, June 16 right here. \u00a0<\/a>\u00a0<\/p>\n

Because there\u2019s a lot more risk in this market than most folks care to admit. Chasing stocks higher into overbought conditions is rarely a good short-term move.<\/p>\n

Traders who are looking to put more money to work will likely have a better opportunity to do so in the days and weeks ahead.<\/p>\n

Best regards and good trading,<\/p>\n

\"Signature\"<\/p>\n

Jeff Clark
Editor, Market Minute<\/em><\/p>\n

\n

Free Trading Resources<\/strong><\/p>\n

Have you checked out Jeff\u2019s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

Investor sentiment is too bullish. And that\u2019s a contrary indicator\u2026<\/p>\n","protected":false},"author":100,"featured_media":0,"comment_status":"closed","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-24291","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/100"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=24291"}],"version-history":[{"count":2,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24291\/revisions"}],"predecessor-version":[{"id":25097,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/24291\/revisions\/25097"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=24291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=24291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=24291"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=24291"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=24291"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=24291"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=24291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}