Thursday, March 3, 2016

CPC Put/Call Ratio Daily Chart Signals Significant Market Top At Hand

The CPC put/call ratio drops to 0.77 signaling uber complacency and lack of fear exactly when a market top typically occurs. Everyone is convinced that the train has left the station and the stock market rally will continue. Traders are buying stocks today while smoking cigars and drinking champagne. They pat each other on the back and tell one another how smart they are impressed with their own intelligence. This complacency results in a selloff.

The red circles are other times complacency was occurring and that is when the bulls are handed their heads on a platter. The pull backs in the SPX for the five red circles are 95 points, 70 handles, 250 points, 70 points and 120 points. All the selloffs occur over a 2 or 3 week period once they begin, or less. A couple are quick couple-day moves. The average is a selloff in the SPX of 120 handles. Dropping the high and low is an average of a 95-point selloff in the SPX. Thus, the selloff should begin at anytime and likely drop from 40 to 120 SPX handles.

The SPX daily chart is very constructive for higher highs. So stocks may flush lower because of the NYMO, CPC and CPCE, but the drop may be fast and fierce and then followed by a quick recovery so nimble trading is likely required. Keystone has brought on index shorts over the last couple days. Keybot the Quant remains long the market (the algo is not designed to catch exact tops and bottoms). 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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