The Consumer Price Index showed an uptick in prices as inflation for the month is showing a slight deceleration.  The key to remember is that we’re now comparing inflation numbers to a year ago as it started to spike last April, so the good news, in this case, isn’t quite what it seems.  We’re comparing a high number in April against an even higher baseline from a year ago.  That doesn’t signal that we’re out of the woods.  

The pressure on the market is coming from several factors (in no particular order):

1. War in Ukraine
2. Inflation
3. Rising interest rates
4. China lockdown from new COVID outbreaks
5. Supply chain Issues

One or two of those things are difficult enough to digest, but altogether they are dragging the market down.  Even bank stocks that do well in periods of rising interest rates are struggling to hold ground.  It just shows how difficult it can be to cherry-pick stocks in this market. 

But is this one indicator showing us that there is some relief in sight?

Below is the one indicator that may predict a market turnaround.

The CBOE Equity Put/Call Ratio takes the number of put options traded divided by the number of call options traded.  Since more investors trade calls, the typical baseline for the ratio is 0.7.  If the put-call ratio is increasing, equity traders are buying more puts than calls which suggests a bearish sentiment in the market.  Likewise, a put-call ratio that is falling and lower than 0.5 indicates a bullish sentiment in the market.