CPC and CPCE CBOE Options Put/Call Ratios Weekly and Daily Charts Signal Significant Market Top

With the new all-time market highs yesterday, traders were drinking the Kool-aid, spiked with the Fed's booze, dancing on table tops while donning lamp shades. The day was filled with uber euphoric optimism, well, at least until GOOG and Mr. Softy laid their eggs last evening. The put/call ratios above clearly show markets in full complacency and lack of fear mode. With Chairman Bernanke promising the world on a silver platter the last two days, traders are now fully convinced that markets will never go down again and 1700+, even 1800, why not 1900, are foregone conclusions, and in fact they may occur by Labor Day. This type of euphoric complacency identifies market tops just as fear and panic identifies the bottoms.

The charts are easy to understand. Green circles identify the significant market bottoms over the last couple years while the red circles identify the significant tops. What do you think is about to happen?

Due to the charts above, protection for market downside is required. Markets will sell off it is only a question as to how much. It may take a few days for the selling to begin in earnest. If you do not like to short the market, or to play the inverse ETF's, or to place puts, it is prudent to take profits on longs and simply go into cash. Take a few weeks off and go to the beach for summer time. Projection is for a market sell off to begin at anytime which can easily match or exceed the May-June sell off. 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.