Sunday, May 8, 2016

CPC and CPCE Put/Call Ratios Signal Near-Term Market Bottom At Hand

Just as the uber low put/calls (red circles) signaled the stock market top a couple weeks ago, traders are now experiencing a whiff of fear, worry, concern and slight panic (green circles) is in the air. The 1.20 level for the CPC and higher is a good rule of thumb for when a market bottom is at hand. The put/calls suggest that it is prudent to scale into longs for very short term (VST) trading. A market bottom can occur anytime any day forward probably early in the week. The bottom may have been placed on Friday at 2039.

When the red circles indicated complacency, when the wine was flowing like water and traders expected stocks to grow to the sky, the thinking was for a 30 to 100-handle pull back in the SPX. Price dropped from 2111 to 2039, a 72-handle pull back, thus far. Stocks may sell off further which will likely send the put/calls higher which further insures that a market bottom is at hand in the VST. A flush lower in stocks would be a very attractive place to go long. The near-term negative energy is playing out or played out. 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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