Ask TheStreet: Contrarian Cues

The 21-day moving average on the put-to-call ratio read 0.59 as of last Monday's close.

"Typically, traders like to see the put/call hit 1.5 or higher to get an oversold signal," says Smith. "But on a big down day, such as a market crash, it can hit extreme readings of 4 or greater. On the other hand, a reading of 0.50 or below indicates a high level of bullishness. So contrarians might think the market top is at hand and start selling."

Mutual Fund Inflows

Mutual funds are the largest ships on the financial sea, and contrarians say it pays to watch investor dollars flow in and out of them.

Arcata, Calif.-based AMG Data Services provides information on mutual fund money flow and holdings data every Thursday at 7 p.m. EDT. In order to provide this data, AMG collects and verifies data from more than 500 sources on 16,900 open-end mutual funds with total assets of about $8.2 trillion. AMG updates mutual fund holdings reports as they are filed with the Securities and Exchange Commission.

According to AMG, U.S. investors shoveled $1.2 billion into equity mutual funds for the period ending April 5. For contrarians looking for a trend, the flows were smaller than the $1.8 billion that the stock mutual funds took in during the prior week.