Tuesday, April 26, 2016

CPCE Put/Call Ratio and SPX S&P 500 Daily Charts Signal Near-Term Top At Hand

Traders are very complacent as the uber low CPCE put/call shows and this bullish euphoria signals a near-term top for stocks is at hand. The wine is flowing like water. Traders are buying small cap speculative stocks with reckless abandon. Safer plays such as consumer staples are kicked to the curb. Trades are buying risk because the central bankers will always support the stock market forever and Fed Chair Yellen will delay rate hikes and provide more easy money candy tomorrow.

The central bankers have manipulated the stock market higher since mid-March with the Draghi pump. Yellen's dovishness in late March provided more market joy. Then the Easter holiday expected bullishness plays out with price staggering sideways. Then more Yellen dovishness creates the mid-April rally. It is ridiculous. Markets are not allowed to fully correct for the last seven years. ECB's Draghi tried to jawbone markets higher last Thursday which did not help. The Fed decision is tomorrow. No one expects a cut. Will the FOMC statement disappoint? Market bulls get two bites of the apple since even if markets would sell off after the Fed announcement, the BOJ is on tap Thursday morning. The fate of the markets are in the hands of Yellen and Kuroda over the next 31 hours. Banzai!

Sticking to the charts and ignoring the sick central banker Keynesian behavior, the expectation is for stocks to top out at any time, likely within a day or two, probably a top this week, then down perhaps 30 to 100 SPX handles over the next week or two, followed by a rebound. The stock market near-term bottom will occur when the CPCE prints above 0.85. 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 Morning, 4/29/16, at 7:51 AM EST: The opening bell for Friday is about 90 minutes away. The SPX is at 2076 testing the 20-day MA support at 2076 down from the high seven days ago at 2111; a 35-handle drop thus far. The CPC put/call ratio is at 1.00 remaining under the 1.20-ish level that would signal fear and panic. So traders remain relaxed about the selloff in stocks and are not concerned. Ditto the CPCE put/call that is at 0.77 remaining under the 0.85-0.90 level that would signal fear and panic and a tradeable market bottom. Thus, the expectation would be for more weakness in stocks until the put/calls print higher, above the  numbers listed, with traders wringing their hands, and that should identify the tradeable bottom to ride back up.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.