Tuesday, January 20, 2015

CPC Put/Call Ratio Chart

The CPC put/call ratio is moving back to complacency again. As stocks sold off this morning traders were simply deciding on which level to enter long again as most everyone remains bullish and complacent without fear. ECB President Draghi plans to fire a huge QE money bazooka in one day's time with money raining down on everyone. Traders fully believe that the Fed and other central bankers can keep the stock market party going indefinitely so there is no need to worry. Party on, Garth.

The CPC drops to 0.80 only a hair away from uber complacency which guarantees a stock market top. The stock market may top out and reverse at any time going forward and the next downdraft may take the SPX down into the 1950's. If the stock market rallies over the next few days, pumped by the ECB, the complacency should increase so the CPC will drop further and print around or under the red line and signal a significant top at hand.

In other words, markets are going to top out say in the days or week at most two weeks ahead and it is simply a question of where price wants to peak out at. Watching the CPC over the next couple days will shed more light on the matter. At any rate, despite any robust rally that may occur in the coming days, you do not want to be long any position you are not willing to hold for a few years. 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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