Thursday, August 15, 2013

CPCE CBOE Options Equity Put/Call Ratio Daily Chart Signals Market Top

The low CPCE indicates four recent tops (black circles) including the current top.  A low put/call ratio shows complacency and a belief that markets will never go down again. Of course, this is when markets go down. The Fed has trained traders well hooking them on the easy money crack cocaine creating the lack of fear or worry. The three prior pull backs resulted in a drop in the SPX of 50 points in 2 or 3 days, 32 points in 1 or 2 days, and in mid-July, 25 points in 3 or 4 days. Thus, assuming the 1694-ish level in the SPX as the top over the last couple days, the current print at 1685 is about a 10-point drop in 1 day's time, so far.

 Averaging the three prior low put/call prints results in a drop of from 25 to 50 SPX points in from 1 to 4 days. The average is 36 points in 2 or 3 days. Thus, if the SPX has dropped 10 points in one day it would be reasonable to expect another 10 or 20 point drop over the next couple days. This exercise only entertains the initial knee-jerk move off the low CPCE. Overall, the low put/call indicates uber complacency that has to be remedied over time so lower prices in the SPX are expected as the weeks move forward. 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.
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4 comments:

  1. AnonymousAugust 15, 2013 at 4:47 AM

    This is the first and last WARNING!
    Close your shorts now, a very violent UP is coming!

    ReplyDelete
  2. AnonymousAugust 15, 2013 at 6:09 AM

    you might be right Anon.
    on marketwatch.com this is the front-page article right now :
    http://blogs.marketwatch.com/thetell/2013/08/15/soross-biggest-holding-a-bearish-call-on-the-sp-500/

    that's a big bearish call - > a bullish sign considering that the disclosure of position is for the previous quarter, not for the present!!!

    V.

    ReplyDelete
  3. AndreAugust 15, 2013 at 6:32 AM

    In my cycle system DJ + DJT in down trend in 2 day graph. Volatility (dutch) 1 + 2 day graphs up.

    Seems to me the trend is down.

    ReplyDelete
  4. Keystone SpeculatorAugust 15, 2013 at 7:02 AM

    Futures are down Thursday morning. If a big drop occurs it may be repeating the April fractal shown on the SPX daily chart this morning resulting in a large up move from the tight bands squeezing in. Can only take it hour to hour. Watch the 8/34 cross on the 30-minute as a guide. Also SOX 473.07. Also XLF 20.12. If the 8/34 cross recovers, or semiconductors recover, that will tell you the bull move is coming. If SOX stays under 473.07, and the 8/34 cross remains negative, markets will remains weak and sell off. If XLF drops under 20.12, down is the market direction, without question. Buffett's fave WFC is down 0.5% pre-market.

    ReplyDelete

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