CPC Put/Call Ratio Daily Chart

Remember this one from yesterday? Scroll back if you missed it or type CPC into the search block above. Keystone uses the 1.2+ level to identify where substantive rallies begin. As CPC moves higher, this signals that fear is increasing in the markets. As fear reaches a fevers pitch, that is exactly where the markets will actually revese and head higher, the negativity is simply too far off the charts.  The idea yesterday was that additional market selling would send the CPC high enough, from 1.15 to tag the 1.2 and higher number, which would set up a substantive market rally.  Instead, the CPC fell to 1.00 as the markets went ahead and rallied. This move shows that there is less fear, not more fear, in the markets over the last day. Many talking heads are wringing their hands over the rampant fear they see in the markets. This is not correct. The lower CPC shows that traders are moving towards complacency, simply resting and waiting for the Euro Summit tomorrow.

It is important that the 1.2+ level was not achieved. If the 1.2+ print would have occurred and yesterday's rally occurred, the bullish move would have far higher street cred. Instead, the markets decided to rally anyway. This would be viewed as a weak rally at this juncture.  The continued thought is that a higher CPC, above 1.2, is needed to set a more firm market bottom in place. This higher CPC can only occur if markets sell off further and beads of sweat form on trader's foreheads. Then, once the 1.2+ level is achieved, we can look for a more extended market rally to begin. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.