Tuesday, April 22, 2014

CPCE Put/Call Ratio Weekly Chart Signals Significant Market Top

The rampant market complacency continues. Traders must still be drunk from Easter as they buy stocks indiscriminately fully relaxed in knowing that Fed Chair Yellen, Queen of the Doves, will always create a higher stock market forever with easy money. There is no reason to worry; simply sit back and enjoy the ride and guaranteed higher stock market forever. Of course the regular readership here knows this behavior is a contrarian signal. The rampant complacency signals a significant market top now in place or finishing up in the days ahead.

SPX 1874 is very strong overhead resistance and April began at 1872 thus the 1872-1874 resistance is a key level the bears must hold. Mixing the put/call ratios with the SPX projections, the thought would be that SPX 1874 would have a good chance of holding now and this week and that a downside move should begin at any time forward likely by the end of the month. Short positions should be steadily increased moving forward.

The weekly print is not official until Friday so the 0.47 may not serve as the final print for the week but it verifies the complacency nonetheless. Ditto the CPC put/call. The VIX is in the 13's as well another metric verifying the laissez-faire attitude of long traders. Do not be fooled by the complacency. The bulls created a market bottom days ago with 0.75 which is a cheesy bottom.

Panic and fear will be coming just as day follows night. Increasing long positions is not attractive until the panic and fear arrives. Instead, trimming back and selling off any long you are not willing to hold for several years should be performed now. The long shopping list can be fine-tuned waiting for the blood to appear in the streets above 0.80 and higher and likely far higher since it has been so long since the markets have corrected. The over 5-year rally is one of the longest in stock market history. Watch your wallet. Do not be complacent--you will regret it as the weeks play out. The time is very near where the markets go down and they do not recover perhaps for a few years before the current highs are seen again. 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.

Note Added 3:03 PM: The bulls come to play again and launch up through the strong 1874 resistance so price leaps immediately above 1880 and also above 1884. SPX S/R is 1874, 1878, 1882, 1884, 1891 and 1897. The bulls want to close above 1884 since it lights the path to 1891. Bears need to push price under 1884. Since 1874 folded like a cheap suit, the 1884 or potentially 1891 level are two candidates for the market top.

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