Ratio Madness
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We have been tracking the Bull, Bear ratio of the $SPY on a daily basis for more than 6 years, going back to January 2014. During the past 30 days or so the ratio of bullish stocks to bearish stocks, as determined by the Chaikin PG, has been steadily carving out new highs. Today, a ratio we were doubtful we'd see, but the overwhelming bullishness in the market has made it so. A bullish or very bullish ratio of 5 to every 1 bearish or very bearish stock. Not only above 5.0, but nearly 6, at 5.68. Truly astonishing. Is this the new normal? Or is this a red flag? In the 6 years of tracking this ratio, we have found that highs in this ratio often proceed sharp corrections. However, this is the first time we've had $6T in stimulus and QE at our backs. We will be watching the ratio and the Chaikin oscillator closely for any indications of what's to come.
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