Sunday, August 9, 2015

CPC Put/Call Ratio and SPX S&P 500 Daily Charts

The markets are choppy sideways this year chewing up bulls and bears alike. From mid-June, the SPX pops from 2070 to 2130 then down to 2040 with a jog move while basing, then back up to 2130 then down again to 2060 then up to 2115 then down to 2070, covering a distance of about 440 points which is over 20% of its entire point range in only 38 days.

The CPC put/call ratio shows the mood swings between complacency and fear which create market tops (red circles) and bottoms (green circles), respectively.

The CPC is up at 1.20 and higher so a near term bottom would be expected, however, the three prior bottoms over the last month have occurred at higher levels of fear and panic. The SPX can easily drop further, with the CPC spiking higher to indicate increasing fear and panic which would then identify the near term bottom; so the green circle in the right margin is drawn large. Once the CPC is over 1.20 the bottom is coming sooner rather than later so any further flush lower in stocks will likely be only a one or two day event if it occurs.

If the market bounce occurs now due to the CPC above 1.20 the rally may be short-lived since the CPC may need to print above 1.40 to at least equal prior levels of fear where the other market bottoms occurred. Keep an eye on the CPC early in the week to see how it plays out. 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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