For the last few weeks we have been calling the recent market strength as nothing but a short term counter trend rally, forecasting a bearish longer-term road ahead. A great indicator that a short term high is approaching is the recent moves on the CBOE Equity Put/Call ratio. As shown below, the ratio of put options (hedge against weakness or bet on a decline) to call options (hedge against strength or bet on an advance) typically declines as stocks rally. On March 4th the ratio made a low, reversing from a declining trend to a rising one, and has since moved higher. Shown below is a similar pattern that occurred on July 22nd 2015 (blue arrows), July 20th 2015 was the all-time high for the NASDAQ and the S&P100 index in the U.S. Odds are increasing that at least a short term trend reversal is near. Chart source: