This Indicator Will Peak Soon, Then it Might Roll Over
I expect the ISE call/put ratio to peak in the next week, but then it faces a bigger question.
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Well, at least everyone stopped chatting about the statistics in the semiconductors for a day! But anyone who was around in 1999 knows that when Qualcomm (QCOM) goes parabolic, maybe it’s gone too far.
I have always contended that the folks over at NAAIM tend to be Mag 7/tech folks. By that I mean that when tech is doing well, they happily increase their exposure to the market. When the 493 are rocking, they are not so keen.
In October 2025 and late December 2025, they increased their exposure to the market to a smidge over 100 (on margin) but in January 2026, when the 493 were in vogue and the Mags were not, their exposure came down. That’s why it is no surprise to me that they have increased their exposure to the market to 97 this week. That‘s high and, again, knocking on the door of giddy.
Then there is the ISE call/put ratio’s 21-day moving average. In late March, my contention was that it should bounce off that 1.10 area. Two weeks ago, I said I thought it would get up to that 1.50 area. It is currently 1.47. I expect it will peak in the next week. My only question is whether it rolls over. Rolling over is bearish.
Nasdaq is where all of the action has been of late. I mean the Dow, which still hasn’t reached over its February high, is trading right where it was on April 20, which pretty much tells you how the 493 are doing.
The Nasdaq McClellan Summation Index, where I use up and down volume instead of the advance/decline line, has stalled for about a week now. Similar to the NYSE’s Summation Index, it has not rolled over, just stalled.
Nasdaq now needs a net differential of +2.3 billion shares (up minus down volume) to get it out of this stall. But when you consider that net volume through Wednesday was positive for five straight days and Nasdaq gained almost 1,200 points in those same five days and this couldn’t get back in gear, it is worth noting. It says this last advance was quite narrow, even within tech.
On Friday morning, we will see the jobs numbers, and while they may move the market quite a bit, I would remind you that the sentiment indicators did not change on Thursday. The DSI for Nasdaq is still 84, which is knocking on giddy’s door. The VIX, while red on the day, also did not see a change in the DSI which is still 21; it can easily become a teenager in a hurry.
So, a rally on news would still push these sentiment indicators over the threshold to giddy.
