A rather large difference has developed between the two major equity-only put-call ratios. In fact, when we look at many of the other broad-based index put-call ratios, we see similar differences. So, what is actually taking place? In this article, we’ll look at the components of these ratios to see if we can discern why this difference exists. This isn’t the first time we’ve seen such differences. One of the more notable occasions was near the bottom of the market in July-August 2002, at which time the equity-only ratios both gave premature buy signals. We have also visited this topic a few others times, albeit infrequently. One was near the bottom in March, 2009.
At this time, there is a “twist” that we haven’t often seen before: the standard equity-only put-call ratio and the weighted ratio are at odds with one another.
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