Thursday, June 20, 2013

CPC Put/Call Ratio Daily Chart

The CPC is at 1.39 a level not seen since the May 2012 sell off. The green circles are market bottoms that occur due to fear and panic. The November bottom that started the rally into May 2013 started from 1.20 which was the minimum threshold typically expected for a recovery rally to begin. If this is a more serious sell off the CPC can easily spike to 1.50 or more. Also, for strong sell offs such as May 2012, the high spike in CPC helps identify a bottom but it may take another two or three weeks before the markets truly place their bottom. The CPC at least provides a layer of comfort that a bottom is at least in the works here forward. It may be a ways lower for equities, but it is starting to materialize.

The important aspect of this chart is how we watched the 0.7's print warning of a significant market top. The low CPC told you that it was not wise to buy stocks and that you need to wait until fear and panic shows up with the CPC moving above 1.20. So here we are. The SPX has already wiped out all of May and June's upside and the indexes are back to the April numbers. So some nibbling on the long shopping list would be in order. Everyone has a long shopping list ready so you can pull it out since the CPC is elevated. Shippers and miners are interesting places to ponder as longs. Scaling into positions is key since the CPC can still spike higher and the affects of the fear and panic may last two or three weeks or so for the broad markets to place their lows. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.