Image Source: Pixabay

The stock market has slowed down recently due to Middle East tensions between Iran and Israel, but we see the Put/Call ratio now back to extremes again. A lot of puts were bought to protect from falling stock prices, so apparently, there was a lot of fear and pessimism lately involved in the markets, however, when this moves into extremes, be aware of the opposite. Looking at the PC inverted chart and attached moving average compared to SP500, we just think that this can be supportive for stocks like in the past cycles.

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If we take a look at the SP500 from a technical perspective and by Elliott wave theory, we can see an impulsive rally which should be finished by a five-wave bullish cycle. So, current slow down can be just a higher degree wave (4) correction, where ideal support comes around 5000-4800 area and from where we can expect a bullish continuation for wave (5).

(Click on image to enlarge)

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