Put/Call Ratio Revisited

As the stock market appears suspended in mid air for much of May and June, I'm looking for any clue as to where it is heading. I hope it is heading somewhere, and not flat-lining forever. (Never say never, it could happen.)

Here's a weekly 3-year chart of put/call ratio. Big picture hasn't changed much since I last looked at it in May, but now I see the spike down in December 2007 as some sort of dislocation, or reset button of some kind.

As you see, in the past 2 months, the put/call ratio is forming a pennant within the big, declining wedge. If the pennant breaks to the direction of prevailing trend (down), that should mean the market is heading for a top.

Below the put/call ratio chart is VIX, which looks like Mount Everest with surrounding lesser mountains. Right now, it is almost back to the base camp. Will it totally descend to much lower altitude, or is it planning to attempt another ascent to the top? It's usually former in stocks and stock indices, but the volatility index may not behave like stock indices.

I think we have to be extra careful right around here. The market may be still poised to go up, but the put/call ratio is closer to the low of December 08 than the high of march 09 (which did signal the market turn - remember put/call ratio is a contra-indicator). From the looks of it, we will know soon enough, maybe within several weeks.