The complacency in the CPC and CPCE charts show that even if the tight bands on the SPX squeeze out an up move, the markets will likely top as that thrust higher occurs and then roll over to the downside. Look at the April fractal highlighted this morning on the SPX daily chart. Price leaped higher from the tight band squeeze which created the April top and failure. Either this behavior will repeat, where the SPX will jump into the 1720's and then quickly fail, or, markets will simply sell off from here. As difficult as it is for a short-seller to witness an upward thrust in the SPX due to the tight bands, the put/calls say any upward thrust will be relatively short-lived like April. Equities are not attractive to buy from a long perspective until the CPC moves above 1.2+ and the CPCE moves above 0.75. Until then, short protection is needed and longs should be avoided with the exception of looking for opportunities in miners, shippers, coffee and individual stocks in niche markets. 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.
KS,
ReplyDeletemy opinion is that we need a $cpc at gigantic complacency levels - on EW it's the end of major 3 - 3'rd waves are where everyone acknowledge the character of a market (bullish/bearish)!
If I see a CPC below 0.7, maybe reaching even 0.6, that would be a top for me.
My opinion is that we will see SPX levels above current maximum level until the end of this week.
V.
Yep, that is a fair assessment. Trading is all about time frames. So in the remaining days this week we know a big move is about to occur, up or down. This is the tricky call and the 20-day MA at 1692 will tell you a lot and likely choose the winner, bulls win above 1692 moving to 1700, 1710 and 1720, or, bears win under 1692 dropping through 1685 then down to 1660. So, today is a big day, and Retail Sales within the one-half hour are going to move markets. Using the put/calls, above, however, and moving into the time frame of, say weeks, the expectation would be that the SPX will very likely be lower than current levels, despite any upside thrust that occurs in coming days, about 2 or 3 weeks out. So markets may jump higher this week as you say and it may potentially set up a move where the bears give up today and give up on shorting, the bulls run into the markets full force which will create a slightly lower put/calls, then the rug is pulled out from the bulls stranding them above SPX 1700, and markets drop, while bears are watching and not participating since they figured markets would continue higher. Markets always strive to hurt the maximum amount of traders.
DeleteThank you KS.
DeleteA very good and precise answer!
I'm 100% with you on that answer!
V.
Nothing to say for today.
ReplyDeleteIt will be a fake move and a reversal.
disclosure: 40% cash, 30% shorts, 30 % longs
GS guy
... a fake move to the downside and after that a reversal to the upside, to be more precise.
DeleteGS guy
Biz Inventories are at 10 AM so that may serve as the pivot.
DeleteGood morning everyone!
ReplyDeleteKS, some individual stocks got beaten down from bad earnings, during market retracement, will those stocks get beat down some more?
Thanks!
The put/call ratios illustrate the uber complacency, traders are completely fearless right now, not a good time to go long any stock. Overall, if there is a desire to put new money to work, this is likely not the time, leave it in cash until the CPC and CPCE explode higher (markets lower) which should be in the coming days and weeks so it should not be too long a wait. That will provide lower and safer entries for longs. But there are always a couple sectors, like miners, shippers, coffee, that provide opportunities, and individual stocks, but you have to study their individual charts to see if they are good to go, or not.
Delete