Everyone is buying stocks no matter what they say otherwise. Young people took their Christmas money and rushed to buy a few shares of Facebook, Apple, Amazon, Alphabet and Netflix today. These enthusiastic buyers will serve as bag holders.
The put/call ratios have been cheated from receiving a significant pull back as they deserve. The drastic collapse in the CPCE to 0.47 indicates there is no fear that stocks can ever sell off again. Even if stocks selloff, the central banks will save the day so there is no need to worry. The rampant complacency has everyone buying stocks at the ask since prices go higher forever. You know this is Fantasyland.
The low put/call in early December only created a small pullback. Then the low reading before Christmas created sogginess but the holiday joy sustained buoyancy in stocks. Now the put/call ratio collapses to 0.47 a multi-year low. What do you think will happen? All the bears have left town. The bulls are celebrating record highs in stocks each day and are care-free that the records will continue forever.
The low put/call gels together with the neggie d showing on the SPX daily chart. Both forecast weakness in the stock market ahead. It would not be surprising to see the SPX to drop from 20 to 80 handles and maybe more. Watch that VIX since bears got nothing unless the VIX moves above 10.23. 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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