Tuesday, April 1, 2014

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

As Alfred E. Neuman says, "what, me worry?" Traders remain uber complacent. With the two-day Yellen orgy rally, promises of China stimulus, perhaps ECB stimulus Thursday morning, the BOJ weakening the yen and buybacks continuing, traders have a right to be euphorically bullish. Traders are high-fiving each other today and the wine is flowing like water. The SPX prints a new all-time high at 1885.84 and new all-time closing high at 1885.52.Television personality Jim Cramer says that markets are not in a bubble and tells Ma and Pa Kettle to not sit on the sidelines anymore. Just think of the many folks that will now place their savings in the stock market. Aunt Edna just took her entire life savings and placed it in dividend stocks via DVY and SDY, high yield bonds via HYG and the broader market via long ETF's listening to what she was told from the television. The uber complacency signals a significant market top is printing now or over the coming days.

Keystone has highlighted the CPC and CPCE charts several times since late last year. You know the drill. Markets bottom with the green circles that show fear and panic in markets. The red circles show market tops when complacency and lack of fear rules, like now. Equities should top now or in coming days and a pull back of say, 20 or 30 handles in the SPX within a week or two, then perhaps 40 to 50 handles, or more, over the next month, would be a reasonable expectation moving forward. The question is where the SPX tops at in the days ahead. 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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