Top Stocks: An End-of-Month Rally?

Jim Cramer calls Top Stocks' Helene Meisler one of the finest technicians in the world. And right now, even in this oversold market, Helene's charts indicate an imminent one- or two-day rally ahead. Don't miss it -- check out Top Stocks FREE now.

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As I posted in Columnist Conversation Wednesday, the index put/call ratio was the highest we've seen in quite some time. In fact, the last three times we saw the ratio in this neighborhood (155%) were Dec. 29, 2008, which led to a decent year-end rally; Dec. 3, 2008, which was followed by an awful day in the market but was then followed by two very good days (first we were down 25 points on the S&P 500 and then up 63 points in the next two days; and the November 2008 lows.

The total put/call ratio was 118%, which is the highest reading we've seen since January's expiration. Keep in mind that January's expiration was followed by the day of the presidential inauguration, an ugly day in the market. In other words, the rally started from a lower point, not right then and there.

This brings me to the moving average of the put/call ratio. Recently, I've shown the chart of the 10-day moving average indicating that it was at the lower end of the chart page, a bearish sign. However, with the past two days' readings it has lifted off the page. I attempted to figure out when it might peak and head back down again which would at least be supportive of the market.

It seems to me it could peak in about four trading days. That would be Tuesday or Wednesday.

The oscillator is not yet maximum oversold. That could be oversold Tuesday or Wednesday as well. Then there is the 30-day moving average of the advance/decline line. It will be moderately oversold again sometime between Friday and Tuesday. Let me alert you that this would be a moderately oversold condition, one that would get overbought again relatively quickly soon after the new month begins.