Sunday, July 16, 2017

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

The complacency is off the charts. Traders are drunk as skunks from Fed wine and ECB champagne buying stocks at the ask. Investors are smoking BOJ crack and buying stocks with total disregard for price. The VIX is at 9.51 basically the lowest number in its history which verifies rampant fearlessness. No one is concerned that the stock market will ever sell off again. Even if it does, the central bankers are the market and they will step in to save the day.

Aunt Agnes, usually a frugal soul, took her entire life savings to the broker in town and placed it all in the stock market. She says the stock market will go up forever. Moe, the local cab driver, says he also invested his entire life savings in stocks proclaiming that in a few years he will retire with all his profits. The low CPCE verifies the rampant complacency and lack of worry or fear.

The red circles show market tops when everyone is partying and complacent. The green circles show fear and panic, when there is blood in the streets. Note how the CPCE does a good job calling the near-term tops but the market bears continue to be screwed by the central bankers with stock market bottoms occurring at unimpressive levels in the 0.65-0.73 range. A notable stock market bottom typically occurs at 0.80 and above, that is when you can start buying stocks and going long.

So what are you going to do in the near-term? Ride the drop lower in equities or cash-out and move to the sidelines? The early June low pretty much nailed the market top to the day but the move lower did not amount to much. The low CPCE print in the middle of the month results in the trend of lower lows and lower highs for stocks into the bottom eight days ago.

The SPX prints an all-time record high at 2463.54 and all-time closing high at 2459.27 the highest numbers in the history of the stock market. Traders are singing "Happy Days Are Here Again" while dancing jigs of joy. What do you think will happen?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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