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I’m going to share something with you that’s become part of my daily routine — and honestly, it should be part of yours too.
It’s not complicated. It doesn’t require special software or an expensive subscription. But it’s something I check every single morning, and it’s helped me make better timing decisions on when to buy and when to take profits.
I’m talking about the Put-Call Ratio — specifically, the CPC indicator.
I know I share this data with you every Tuesday during our Opening Playbook sessions, but I want to show you exactly how to pull this yourself.
Here’s a link to a free chart I use on StockCharts.
How to Read the Put-Call Ratio
The Put-Call Ratio tells us the total puts divided by the total calls traded in the S&P 500. It’s a sentiment gauge, and because the stock market tends to go up more often than it goes down, this reading typically stays below 1.0.
But when the reading spikes above 1.0, that means put buyers are outweighing call buyers — and that’s a contrarian signal. When we get a reading above 1.0, that’s typically when I’m buying stocks. We saw this happen right around the 200-day moving average — clear buy signals.
On the flip side, when the reading dips below 0.75, we’re overextended on the call side. It doesn’t mean we’re going to see a 5% to 6% pullback, but it does tell me we’re probably going to see at least a couple days of chop.
That’s when I may look to lock in profits if I’m up nicely in some positions, and this is exactly why knowing how to check this yourself is so helpful.
The Exact Thresholds I Use
Let me keep this simple: Above 1.0, I’m buying stocks. Below 0.75, I’m taking some profits.
That’s it. Two clear thresholds that guide my daily decisions.
After the big move higher recently off the 100-day moving average, the CPC got overextended, so I expected a few days of chop. I wouldn’t be shocked if we get back to the 50-day moving average as another buying opportunity.
You should bookmark this Stock Charts link and start checking this indicator daily. You can also use Bar Chart or other sources, but the point is — start checking this yourself each morning and it can help you get a better lay of the land.
The CPC is one of those tools that once you start using it, you’ll wonder how you ever traded without it. It’s not about predicting the future — it’s about understanding sentiment and positioning yourself accordingly.
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Ready for What the Fed Might Do on Dec. 10?
I don’t think many retail traders understand the turmoil we’re heading into over the next couple of weeks.
Right now, the Fed is set to make its second interest rate decision WITHOUT having access to any critical data!
Which means, whether Fed Chair Jerome Powell decides to cut, hold or pull a 180° with a rate hike, the market won’t take it lying down.
We might see some of the market’s favorite names slump lower while unexpected stocks spike… or vice versa.
But what I do know is that the traders who know how to target cash in the midst of chaos will be the only ones eating well.
Them and those with pure blind luck on their side — so if you think you’re feeling lucky, more power to you.
But if you’d like to see how smarter traders have been leveraging chaotic markets for cash opportunities…
Then I’ve got THREE critical trading files you should see right now.
These files contain techniques that are designed for the kind of volatility the market is heading into over the next few weeks.
We can’t make absolute guarantees, of course, but if you’d like to get your hands on them…
