Today the equity put-call ratio soared through its upper Bollinger Band® to 0.94.
The CPCI ended the day up near its top Bollinger Band. So did the SPDR S&P 500 (ARCA:SPY) put-call ratio, but on a large drop in open interest, which is now very low.
So, even though there was a huge surge in put volume today, SPY put-call open interest has dropped so low that the imbalance may not have a huge effect. By that I mean that you would usually see a strong up day tomorrow, but that it’s less likely to be the start of a big rally than part of a few days’ consolidation before a move to a lower low.
ES and SPY also put inverse H&S failures on their charts today, with breakouts past the head.
Today SPY Broke Out Past the Head of a Failed Inverse H&S
The inverse H&S has an irregular placement up at the all-time high, but I saw a number of traders tweeting about it last week so presumably people were betting it and that accounts for some of today’s meltdown.
The target for the downward breakout is a little below the March low, which is also the target for the failed breakout from the ascending triangle that started forming with the March low.
You’d often see a retest of the breakout past the inverse H&S head before the price continued to its target.