Sunday, May 1, 2016

CPC and CPCE Put/Call Ratio's and SPX S&P 500 Daily Charts Near-Term Bottom Approaching

The CPCE spikes higher to 0.86 and CPC to 1.16. Just as the lows put/calls indicate complacency and lack of fear (market top) the elevated readings indicate a tinge of panic and fear developing (a market bottom approaching). The elevated numbers are where prior recent put/call highs occurred which is where stock market lows occurred, however, note that these are only 3 to 5 day rallies that then peter out. In addition, there has not been a real good whiff of fear since the mid-February bottom so perhaps this time around markets may sell off further to spike the CPC and CPCE higher and create a more firm market bottom as traders are screaming and throwing stocks overboard with reckless abandon.

China economic data is soft on the weekend so traders will listen for talk of PBOC stimulus which would likely goose global stock markets higher. If the PBOC remains quiet, markets may start the week in a bad mood instead.

The put/calls suggest that chasing the short side may not be prudent. If already short, a move lower would be a good time to exit since the put/calls would likely print higher and commit to an imminent bottom in the stock market. A wash out lower on Monday and/or Tuesday would likely create a firm bottom for stocks while a move higher in stocks to begin the week will continue the choppy erratic malaise for the stock market. 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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