Tuesday, December 23, 2014

CPC CBOE Put/Call Ratio Daily Chart Signals Near-Term Market Top

The Q3 GDP prints seconds ago with a 5-handle; +5% blowing out even the highest estimates. The calls for a Fed rate hike sooner rather than later will occur. S&P futures jump higher to +8 and climbing.

Interestingly, the CPC signals a near term market top as traders are tripping over each other to buy stocks. Reference the previous CPC chart for more study. The red circles highlight important recent market tops and the green circles highlight important market bottoms. What do you think will happen?

The low 0.75 print, and 0.49 on the CPCE, verify the bullish euphoria and complacency currently in markets. Traders believe in the positive December seasonality expecting higher stocks into 2015 and perhaps Dow 18K today. The CPC tells you that placing shorts for a near-term down move is prudent. If you do not like to play the short side and are a long-only trader, then you do not want to buy any stocks right now and if you were thinking about trimming back any positions the opening pop today is likely your best opportunity to exit. 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 7:55 PM:  The day plays out and the SPX prints new all-time record highs. The CPC above is at 0.86 and CPCE at 0.52. Nothing has changed; same analysis holds. The complacency should create the near-term top any day forward.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.