The put-to-call ratio rose to an elevated level this week, for the sixth time since the market's bull run began in March, 2009.
Four of the previous five occurrences signaled the end of a minor stock market pullback, as sentiment became overly bearish, according to Kevin Pleines of Birinyi Associates.
The CBOE put-to-call ratio closed at 1.15 Tuesday but had backed down to 0.97 Wednesday. The ratio represents the number of puts versus calls on all index and equities options at the Chicago Board of Options Exchange.
When the market has moved higher after these periods, the S&P 500 gained an average 0.85 percent in the first week and an average 2.3 percent in the first month.
Within two months, the S&P gained 4.5 percent. The last occurrence was March 16, which marked the end of the S&P's 7 percent late winter decline. Pleines said it appears the market may be on an upswing again after a slight pull back.
"Within the next couple days, we'll see. At least looking at today's performance, it looks like one of the four-out-of-five occurrences," he said. The S&P finished Wednesday up 11 at 1340.
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