Is extreme hi VIX bullish? Is a high put/call ratio bullish? I know they are but lately this got to be confusing when I read other commentaries.

Yes you have them correct. The VIX is something that is a little harder to get a fix on. It moves inversely with prices. It measures volatility components on S&P 100 options. The higher the volatility, the more fear in the market and the higher the VIX reading. That usually happens at extreme selling levels. The ‘normal’ range is 20 to 30 when the market is running along in a rally or in light selling. If it gets down near 20, there is low volatility, and the likelihood of a correction. If it gets near 30, that can be enough to turn a mild correction. If selling gets heavier, however, volatility needs to get much higher. The forties, and more likely the upper fifties are needed to really jack up the fear and end a bear market. In September, volatility shot 57.31 intraday; not the highest on record, but it showed extremes. That was a good signal along with the put/call ratio and massive volume that a turn was coming.

The put/call ratio is another contrary indicator. The higher the close, the better it is. Typically a 0.4 reading or lower shows excessive bullishness (no one buying puts; everyone thinking the market is going higher) and can indicate a correction coming. 0.7 and up shows some healthy fear. Again, you look to the extremes for the best signals a change is coming. For the put/call ratio, those are closes above 1.0, i.e., more puts being traded than calls. Option traders overall are speculative. They buy short term out of the money options trying to hit the home run. When the majority get bearish and buy a lot of puts, that is a signal a change is most likely coming. One such close usually does not get it. Two is better. Back in September we saw 4 out of 5 trading session close with a 1.0 or better ratio.