The bears might as well throw a party because betting on a down market is getting crowded. Soon after I hemmed and hawed about whether to hedge my AAPL calls (and subsequently bought some AMZN and index puts), I checked some of my charts and noticed that I wasn't alone.The CPCE (Equity-only Put/Call Ratio) is off the charts negative again with a 0.97 ratio. John Summa, the founder of optionsNerd.com, writes a great article listed in Investopedia about this indicator. What the indicator tells us is that a LOT of folks are betting on the market (or individual stocks) going down in the short term. What the article confirms is that this bet is most often wrong.
Tomorrow's PPI news, based on the options data, probably means that good news will have a better spike than bad news (everyone is already in the bad news trade). This indicator, in combination with others that are still saying we are in an oversold condition has me a little more bullish about this week's outcome.
We are running out of sellers. That is what the data are saying.
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