Saturday, March 19, 2016

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

Traders were staggering around on Friday  drunk as skunks from imbibing at the Fed's spiked punch bowl. Stocks rally strongly the last couple days fueled by central banker easy money promises. The euphoria is off the charts. A trader was asked why he bot a stock on the long side yesterday but he did not know what he was buying and proclaimed it does not matter, 'simply buy anything on the long side otherwise you are missing the train leaving the station'. It is a joyous bullish party without fear or worry!

The CPCE collapses to 0.55 the uber low reading matching the uber low CPC put/call reading the day before verifying the off-the-charts bullishness described above. The VIX dropped under 14 showing lack of fear by traders since the central bankers will support stocks forever (or at least attempt to). The stock market is about to have a quick religious experience. If you did not place protection on Friday and exit longs shame on you.

It would not be surprising to see stocks tumble out of the gate on Monday morning. This would trap the maximum amount of bulls that got caught up in Friday's party euphoria. If, however, stocks ramp higher on Monday morning consider it a gift to get short. Stocks should top out at any time and may have placed the top yesterday and it will not be surprising to see a quick ( a few days or week or two weeks) flush lower of 30 to 100 SPX handles.

The SPX daily chart indicators RSI, MACD line and money flow are long and strong and the weekly chart indicators are long and strong, however, so after the flush lower there will likely be a quick recovery back to current price levels and a bit higher. Even though next week is a holiday-shortened week (markets closed on Good Friday), it is likely going to be a wild week and also the week after that which closes out March.

The prior red circle for the last stock market  top dropped the SPX from 2010 to 1970 (intraday numbers) a 40-handle dump. Now that both the CPC and CPCE are at low numbers verifying the uber complacency and a top at hand, the dump this time should be far more than 40 SPX handles. 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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