Monday, February 2, 2015

SPX and CPCE Put/Call Ratio Daily Charts

The CPC and CPCE put/call ratio's stumble sideways not wanting to tip their hand. The stock market tops were easy calls with the CPCE down at 0.5. The October bottom occurs with the 0.90. The CPCE came up to print at 0.80-ish that has been signaling recent market bottoms. The red channel shows, however, that a continued upside move may occur perhaps in a wash-out market selloff a la mid-October with a CPCE spiking above 0.80.

Panic and fear is shown by a CPCE put/call above 0.80 as traders seek more protection. Once everyone becomes afraid, that is when the market bottom occurs. The market tops occur at CPCE under 0.55-ish which signals complacency and lack of fear. The last strong signal is during the early days of January with the market bottom since then the action is sideways.

Note how the SPX keeps teasing the January lows. If this ruptures, a test of the December low will occur quickly and if that occurs price is going down to the October lows. With the 0.80 reading a day ago the bulls have to be given the near-term advantage and a rally move may occur just like the two rally moves in January. A news event, however, could throw markets into a tailspin with a spike higher in CPCE and drop in stocks. This outcome is better if wanting to play the long side since if the CPCE spikes above 0.80 you will  have more confidence that a near-term bottom is at hand. 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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