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There’s been a lot of fear in the markets the past few days, but here’s something interesting…
We just saw our second put-call ratio (CPC) reading above 1.0 in the last week, and that’s not something we see all that often.
Now, before I get into what this means, let me ask you something: If I told you there are officially more put buyers in the market than call buyers right now, would you think that’s a signal to buy stocks or sell them?
Most people would say sell. And that’s exactly why this is such a powerful contrarian indicator.
What the CPC Actually Tells Us
The CPC measures the relationship between put buyers and call buyers. When this reading pops above 1.0, it means there are officially more put buyers in the market than call buyers.
On the surface, that sounds bearish. I know headlines will try to push fear when this happens. Someone’s always talking about how some big institution bought a bunch of December puts and trying to make it sound scary.
But here’s what the data actually shows: Historically, whenever there’s more put buyers than call buyers, you normally want to be on the opposite side. You don’t want to be buying puts when this happens. You want to be buying calls or going long, looking for stocks at a discount.
Nothing works 100% of the time — I’ll be the first to tell you that. But more often than not, when this pops above 1.0, markets rebound very nicely from there.
The current reading Monday morning hit 1.04 which tells us that put buyers are probably a little bit overextended in the near term. That typically means we should ideally see a bounce from here.
Why This Creates Opportunity Right Now
The inverse of this principle is just as important. When people start piling in and get all excited, when everybody starts buying long, that’s usually time to sell.
But right now, we’re seeing the opposite setup.
What gets me particularly excited is the timing. We’ve been trading markets at all-time highs, and many names have been doing quite well.
But I’m very interested to see what some of these opportunities look like when we get them at a discount.
This is the kind of setup where you want to be looking for quality names that have pulled back, not chasing fear. The crowd is leaning one way, and the data suggests that’s exactly when you want to lean the other direction.
Don’t let the fear-driven headlines distract you from what the actual data is telling us. Pay attention to readings like this — they don’t flash every day, and when they do, they’re worth paying attention to.
Graham Lindman
Graham Lindman Trading
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Now here’s the important part…
The Viral Stock Scanner just caught yet another stock building powerful social momentum as you read this.
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He’s willing to hand you the details of this stock and even show you how best to get in on it.
It goes without saying that I can’t make absolute guarantees here…
We develop tools and strategies to the best of our ability but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. Over the last three years, Dave was able to turn a $38k retirement account into $315,000 trading what he calls Viral Stocks on X. What you will see today are some of the best examples, and only a small fraction of the overall trades that it took to build up the account. There were smaller winners and there were losers along the way. We’ve taken Dave’s methodology and created a “Viral Stock Scanner” to help us find these opportunities automatically. Since we can not promise future returns, we are not implying that this new software system will help you see similar results to Dave. Because the new Viral Stock scanner is a tool for traders, results will vary among users. Trade at your own risk.
