Wednesday, December 16, 2015

CPC and CPCE Put/Call Ratios Daily Charts Signal Significant Market Top At Hand

Keystone posted the CPCE put/call ratio chart the other day which signaled a market top nearing but the conclusion, however, was that the Federal Reserve rate hike circus had to play out first to see how that affects markets. That drama is in the rear-view mirror after Fed Chair Yellen hikes 25 basis points today the first FOMC rate hike in nearly 10 years.

Stocks rally strongly on the news since Yellen flapped her dovish wings in the wording in the statement and also in the press conference. The CPC and CPCE put/call ratios print lows not seen since the August top. The SPX dropped about 220 handles for the August waterfall crash. Another key top identified by the low put/calls was Halloween; markets topped out and the SPX tumbled about 90 handles.

The stock market is expected to roll over any day forward and the drop may be very significant. Any further rally can be shorted. The bulls may goose stocks higher but the low put/calls signal the uber complacency in markets and market top at hand.

The expectation is for stocks to top out any day forward, if not tomorrow then Friday, if not Friday then Monday, if not Monday then Tuesday, but very likely stocks should top out by Tuesday. The SPX would be expected to drop, says, from 60 to 200 handles, maybe more, who knows, in these crazy markets. Thus, assess all your long plays, do not stick around in the long trades you do not like. Cut bait and run. Do not get caught up in the long side if there is another mini rally tomorrow or Friday, they would actually be good rallies to short. Stocks should have an exciting finish to the year and it should be a dramatic selloff into the New Year. 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 Friday evening, 12/18/15, at 7:48 PM EST: The SPX pukes over the last couple days teaching everyone that was complacent a lesson. The S&P 500 plummets from 2077 down to 2005, 72 handles, -3.5%, but all of you knew it was going to happen ahead of time.

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