Tuesday, January 14, 2014

CPC Put/Call Ratio Daily Chart Signals Significant Market Top

Keystone tucks the fiddle under his chin and plays the song one more time. Here is the CPC put/call once again signaling the rampant complacency and complete lack of fear in the markets. Traders are all in on the long side without carrying any protection. The VIX dropped under 12 the last two consecutive days. Traders are not worried since the Fed and BOJ will pump equities higher forever. The party is in full swing with traders donning lamp shades, dancing jigs of joy, drunk as skunks, but starting to speak ignorantly to attractive young ladies that begin to leave the party to avoid the harassment. No party goes on forever, especially one with limitless booze. People, and markets, have an ugly side that shows up eventually.

The chart does not need an explanation. The red circles indicate significant market tops. The green circles indicate significant market bottoms. This is a unique point in market history right now. Take a deep breath and realize the epic importance. You have one of the rare advantages of looking through the window watching the coming market event from a safe distance. The party continues into the wee hours of the morning when all the stupid stuff occurs. It is best to be watching from a distance.

Continue refining your long shopping list for the long side so you can start buying again when the CPC starts moving above 1.20, but, not a moment before. You may have to wait quite a few weeks. Do not be lulled into complacency like the others. It's fun to be part of the party but when the cops show up and place you in handcuffs you wish that you had not been there. The siren song of the lovely ladies in the mist will cause your ship to crash on the rocky shore line. The smart folks have taken all their profits from the long side, thrown overboard any long position they are not willing to hold for a few years, and are sitting in cash, and/or increasing shorts each day forward. 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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