Thursday, November 3, 2016

CPC and CPCE Put/Call Ratio Daily Charts Signal Market Bottom At Hand

Just as the low put/call readings signal a market top, the elevated put/calls signal a market bottom at hand. The stock market bottom can occur at anytime forward, any hour or day ahead. The Jobs Report tomorrow morning may be a catalyst. The expectation is that a bottom will be placed and a rally should occur for a week or two. Of course, any negative news events may alter this outcome and the US presidential election is on Tuesday. Events can also kick the rally into high gear to satisfy the put/calls.

The fear and panic is rampant which creates the bottom just as everyone loads up on the short side. The cab driver said he just took his entire life savings and went short the market. Note the spike highs in mid-January which directly identified an intraday tradeable bottom that sent the SPX from 1815-ish to 1950 in a couple weeks. Then stocks collapsed again to the mid-February low which began the long 9-month rally to the present. Stocks topped out in August.

Note the spike highs in June that correspond to the tradeable bottom in the SPX at 1992 that rallied to 2175 in two weeks time. So keep your guard up if short. If you have profits on shorts, take them at the opening bell. The rally will likely be a short-lived event so it is for short term and swing traders. Keystone remains unenthusiastic about the stock market for the intermediate and long-term. The 18-year stock cycle remains in the secular bear pattern until 2018 so there may be some serious pain ahead for stocks over the coming 1 to 4 years.

The forecast is that a bottom should occur in stocks at anytime. Keystone brought on a long 2x ETF trade yesterday and will add to it looking for the quickie rally that should manifest say over a couple weeks time. 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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