Thursday, August 11, 2016

CPCE Put/Call Ratio Daily Chart

Markets are behaving erratically after eight years of central banker intervention. Economic textbooks are thrown into the dumpster as global economies and markets negotiate uncharted waters. The put/call information is very erratic over the last couple months. A stock market top is identified in July but the pull back in equities was paltry since the BOE stepped in last Thursday to save the day and then the Jobs Report joy last Friday extended the party.

The CPCE only climbed to a paltry 0.75-ish to identify the bottom in the stock market and now stocks are at and near new all-time highs with the CPCE collapsing lower again. The low put/call verifies the ongoing complacency. Ditto the low VIX. Traders are not worried about stocks ever selling off and if so, they proclaim it to be a buying opportunity since the Fed and other central bankers plan to remain accomodative forever. Every day is a party without fear or worry. You know what happens when this is the case.

The stock market needs to pull back and introduce some fear into the equation again especially since there has been no fear for a couple months. An attractive tradeable bottom does not occur until the CPCE moves above 0.80. Stocks should sell off until the CPCE prints inside the green circle in the right margin. S&P futures are +6 two hours before the opening bell on Thursday, 8/11/16. The joy continues. Traders are sipping Fed wine and staggering around buying stocks without a care in the world. It is prudent to not drink the Fed wine and instead take a sober stance on stocks in the near-term. 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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