Monday, December 28, 2015

CPCE CBOE Put/Call Ratio Daily Chart Signals Near-Term Bottom

The wild whipsaw choppy sideways behavior continues in the stock market. A couple days ago the maroon circle at 0.55 indicated a market top at hand due to complacency but the bears got jipped. The SPX dropped from 2066 to 2044 from last Thursday to today a measly 22 handles. The market drop due to the red circle was 75 SPX handles. However, look at the spike in the CPCE up to 1.21. As Jed Clampett would exclaim on the Beverly Hillbillies television comedy show, "weellll, doggies."

Traders have went from complacency to fear and panic in only a couple day's time. The CPC put/call ratio is also elevated at 1.31. Both the elevated CPCE and CPC indicate that a near-term market bottom is at hand. So any further drops in stocks tomorrow can be bought on the long side (for very short term trading). Traders were drinking Fed and ECB champagne on Christmas Eve buying any stock with a heartbeat but today the opposite occurs. Traders were panicking this morning and buying downside protection to guard against any market drop, hence, the market will not drop. The fear and panic shown by the elevated put/call ratios should create a rally starting any day ahead. The SPX began the month at 2080 and the year started at 2059. 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, 12/29/15, evening: The stock market launched higher today as the put/call ratio dictated. The SPX is up 22 points, +1.1%, to 2078. The Dow gains 193 points. Here is the funny part. The CPCE and CPC put/calls immediately collapse lower into complacency again now signaling a market top. This is odd behavior.

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