Saturday, November 30, 2013

CPCE Put/Call Ratio Daily Chart Signals Significant Market Top

The put/call ratio saga with CPCE and CPC continues. The red circles show market tops and the green circles show market bottoms. The uber complacency and fearlessness in the market is rampant with long traders now trained like Pavlov's dog to push equities higher each time a Fed head speaks, which is now 2 or 3 times per day, or, when the BOJ further bludgeons the yen, sending the dollar/yen higher and the Nikkei and U.S. stocks higher. The Fed and other central bankers are the market. The CPCE clearly illustrates this mindset with traders 100% convinced that QE tapering will not begin until March 2014.  Traders are staggering around holding half empty wine bottles, already raising their hands to order up more Fed booze and central banker easy money crack cocaine to keep the party going. The bullish fun feels like it will go on forever. It is a party to end all parties.

The chart says the fun will end, however, and end any day forward. We have been monitoring the uber market complacency with the put/call ratios for about 5 weeks now. A roll over in the broad indexes would have been expected by now. The Fed and BOJ have taken the tag-team approach, like phony Studio Wrestling entertainment, where the stock market was pumped by Yellen's dovish confirmation talk, which then flowed into the constant daily barrage of Fed speakers saying that QE Infinity will continue forever, which then flowed into the BOJ weakening the yen over the last month, all creating the stock market upside orgy. Long traders are docile and complacent, feeling very comfy and secure with the Fed snuggie keeping their upper body warm and the BOJ fuzzy slippers keeping their feet warm. The CPCE 0.48 print says the snuggie will be pulled away, the slippers torn from their feet and the long traders thrown out into the cold moving forward.

Any long position should be assessed; if you are content with holding the long for a few years, then keep it, no worries. If you are not attached to the long trade, throw it overboard. Continue working on your long shopping list but do not go into the market long side until folks are jumping out of windows and the blood is in the streets in the green circle above 0.75. If the market elevation continues, be patient, you will not be missing anything on the upside which is now like picking up nickels in front of a bulldozer. Next week should be very interesting trading. Watch your wallet. 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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