Rate Cut Attracts the Bulls

Well, didn't everyone turn bullish in about five minutes after the Fed meeting? Not only can I tell from the chatter everywhere, but I can tell from the equity put/call ratio because it sunk into the 60s on Tuesday's rally.

Now, falling into the 60s is not the end of the world. But I would have preferred it to stay in the 70s, at least. However, if we couple the low reading in the Chicago Board Options Exchange equity put/call ratio with the very high reading in the International Securities Exchange equity call/put ratio we have a short-term stumbling block.

On the chart below I have used arrows to show points A through H. Each one of these arrows represents a reading over 175% in the ISE equity call/put ratio. Tuesday's reading was 176%.

You'll have to squint to see this, but the point is that we never got such a high reading at a low. We didn't always get a high reading at a high, but within a few days we always saw the market retreat and give back a fair bit of the gains -- sometimes all of the gains.

If you want to look up the dates on your own they are as follows: May 16, June 5, July 8, Aug. 5, Aug. 11, Aug. 22 (there's a theme here: August was a "rally" month), Sept. 23 and Oct. 17.

We still have three more days to go before we reach the final expiration of the year, so I don't know if expiration will keep the market up until then. But we often find the market move down the day post expiration. Therefore, if we don't go down between now and Friday to "relieve" the high ISE equity call/put ratio then my vote would be for it to occur on Monday.

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At the time of publication, Meisler had no positions in any stocks mentioned, although holdings can change at any time.

Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information, click here. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback; click here to send her an email.