- S&P 500 looks overdue for a pullback, according to key options market metric.
- The anti-risk Japanese yen would draw bids if stocks drop.
The two-month average of S&P 500’s put-call ratio has jumped to insanely high levels, which in the past, have led to pullbacks and corrections in the stock market, according to sentiment trader and strategist Troy Bombardia,
The put-call ratio refers to the proportion of all the put options or bearish bets and all the call options or bullish bets purchased on any given day, The metric is widely used to gauge investor sentiment.
As of Monday, the S&P 500’s put-call ratio was 0.56. “The last time this happened was before stocks crashed in February 2020,” Bombardia tweeted.
If the historical data related to the put-call ratio is a guide, the JPY crosses may be trading close to topping out. A stock market correction, if any, will likely strengthen the bid tone around the anti-risk Japanese yen, pushing JPY crosses lower.
At press time, USD/JPY is trading largely unchanged on the day at 107.34.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD finally broke above 0.6700… will it last?
AUD/USD added to Tuesday’s advance and rose markedly in a context favourable to the risk-associated space following the sharp data-driven sell-off in the Greenback, while auspicious results from the domestic calendar also lent legs to AUD.
EUR/USD: Bullish outlook expected above the 200-day SMA
EUR/USD extended its multi-session recovery north of 1.0800 the figure following the persistent retracement in the US Dollar and against the backdrop of steady expectation ahead of the second round of French elections on July 7.
Gold reaches $2,360 on broad USD weakness
Gold gathers bullish momentum and trades at its highest level in nearly two weeks above $2,360. Following the disappointing ADP Employment Change and ISM Services PMI data from the US, the 10-year US yield declines sharply, helping XAU/USD extend its daily rally.
Ripple legal battle underway as on-chain metrics turn bullish, XRP eyes recovery to $0.50
Ripple made a comeback above $0.48 on Tuesday and hovers above that level in Wednesday’s European session. Ripple on-chain metrics such as transaction volume and Network Realized Profit/Loss (NPL) have turned bullish, supporting a recovery in the altcoin.
Disinflation in the United States: The scale of the sacrifice on the labour market
Since a 1977 act, the dual mandate of the Federal Reserve (Fed) has de jure entrusted it with the objectives of maximum employment and price stability (the latter being expected to favour the former in the long term).