Tuesday, December 15, 2015

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

Despite all the hand-wringing and angst professed by market participants, traders are not playing stocks the way they feel. Instead, traders are complacent and not concerned about the pending Fed announcement tomorrow. Everybody and his bro are tripping over each other to buy stocks; the talking heads and traders may say they are worried but they are relaxed, not fearful at all and buying stocks. S&P futures point to an over 20-point gain in the SPX at the opening bell for today (Tuesday, 12/15/15).

The red circles are significant market tops; the green circles are bottoms. What do you think will happen? The FOMC decision is on tap tomorrow so there can be much erratic action over the next two days. However, after the smoke clears, say heading into the weekend and early next week, the complacency in the chart says a market top will be the order of the day. If you do want to play the long side for short trades you must remain extremely nimble and cautious. Check the CPCE this evening, as well as the CPC to see if the complacency increases (which would be lower numbers). 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 Tuesday Evening, 7:27 PM EST:  The market rallies today. The CPCE is at 0.66 so it moves a bit higher. The CPC is at 0.88 printing the lowest number in a month. Thus, despite all the worry by pundits, traders and analysts, everyone continues to buy stocks and deep-down they are relaxed, complacent and not concerned about the epic Fed day tomorrow. So the above analysis holds; the market top may be in now due to the complacency. If Yellen, Queen of the Doves, sends stocks higher with a big rally on Wednesday afternoon, the put/calls will likely fall or remain flat so the market top may be more likely on Friday or early next week. If the Fed was not on tap tomorrow, then a market top would be expected any day forward as per the low put/calls.

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