Put-Call Ratio Signaled the Bottom
Apparently traders had been very busy buying puts this week as the put-call ratio hit 1.15 on Tuesday. Typically when this ratio hits this level it signals a near term bottom. Interesting that it occurred so close to the top this time, but considering a lot of the 'risk on' stocks were down 15, 20, or 25% from recent highs maybe that explains the level of fear was extreme even if the overall market didn't show it. See the below chart from Birinyi Associates via CNBC . It shows how 4 out of 5 times since the March 2009 bottom that this ratio signaled the bottom.