Tuesday, November 5, 2013
CPC Put/Call Ratio Weekly and Daily Charts Ongoing Complacency Signaling Market Top
Two weeks ago the CPC and CPCE both printed multi-month low numbers signaling rampant complacency in the markets. No one expects the stock market to sell off. Even those that wax worry are buying the long side minutes later. Watch what traders do not what they say. The red circles show the significant market tops recently and over the last three years and the green circles show the significant market bottoms. The market bottoms tend to be 'V' bottoms and occur closer to where the fear and panic is achieved above 1.20+. The higher the CPC moves the greater fear. In a large market sell off the CPC will spike above 1.4 or 1.5. That signals blood in the streets which is the ideal time to buy the market long like after the August 2011 waterfall crash.
Obviously the charts show uber complacency in the markets and that is reflected by the daily print and television media. The pat response by pundits, analysts and traders is that markets will move higher into 2014 since the Fed will not taper until March or later. The markets are completely Fed-driven. This creates the complacency. Like having a rich uncle that always bails you out, literally, from jail and from financial dilemmas. Your actions will only become more reckless since there are never any consequences; Uncle Ben is always there, well, until he isn't. The time comes when either Uncle Ben chooses to no longer bail you out, or he is no longer able to bail you out. The markets are at that point now.
The start of a large sell off was projected with the low put/call's a couple weeks ago. Markets placed a top a few days ago but it is still up in the air whether it is THE top. On the daily, the CPC has now recoiled twice down into the 0.7's after the uber low print 2 weeks ago. This continued complacency helps keep the stock market elevated, floating in suspended animation, for now. Projection remains for a major market sell off to begin from these levels or a bit higher within the next few days. If the top from a few days ago does not hold, the market top should be placed this week. If you enjoyed the long side all year long, take the money and run. 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.