The overbought and oversold levels for the 5 day ema of the put/call ratio (chart above) are lower for the bear market, so I adjusted them accordingly.This indicator reached oversold and the market started to rally, so I think we are now in an intermediate term bear market rally. These go up 10-20%, last for 1-2 months and are volatile.
Shorter term, the simple put/call ratio suggests there is more upside in the coming 1-2 days.
The green arrows highlight the ratio moving contrary to the market. A deeper daily correction usually takes place after a bigger spike to the upside on the inverted chart. Thus, today's gap down is a short term buy, but a fast rally to 1220 is a sell.
The bear-market rally will resume its course after a 2-3 day deep correction on the daily chart.
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