Note: We have not been examining the Put/Call ratios in this space lately. Right now the 3-dma of the aggregate Put/Call Ratio is at 1.06, which is very high and would have been, in the past, considered very bullish on a contrarian basis. However, the same thing happened just before March Options Expiration (3/18) to no bullish effect. On that date the P/C 3-dma hit a high of 1.13. Over the ensuing 6 trading days the SPX fell 25 points from a close of 1190 to 1165.
Over the past hundred days we have seen only the most tenuous inverse correlations between various Put/Call moving averages and the SPX (on the order of -0.17 to -0.20). And it is my view that the current high level of put-trading is not a, at present, a good contrary indicator. As for WHY the Put/Call Ratios are not working at the moment, I can speculate: hedge funds are running the preponderance of fast money now, and they have changed the patterns in put-buying. As for the specifics of how they have changed those patterns, well, that's beyond what we can do in this space. Suffice it to say that the hedgies use puts a lot even when the market is not tanking. And that means that spikes in the ratios may exist otherwise than at market bottoms.