SPX S&P 500 and CPC and CPCE Put/Call Ratios Daily Charts; Near-Term Market Top Approaching

The CPC and CPCE put/call ratios provide insight into complacency versus fear. You want to buy the fear and sell the complacency. What would you do based on the charts above?

Clearly, both the CPC and CPCE put/calls are venturing into the complacency realm. Traders are euphoric. For the last week or two, pundits parade across business television screens proclaiming SPX targets of 3K, 3.1K and higher. In general, global central bankers remain accomodative providing easy money that continually pumps equities higher since March 2009. As Alfred E Neuman says, "What, me worry?"

In addition, the Whitehouse is into the stock market pumping game lately professing imminent trade deals each time the stock market dips. At the same time, yesterday, President Trump says the Federal Reserve is hiking rates too fast and should instead remain accomodative longer so the wealthy can continue to rape America with big stock gains. Thus, traders buy calls with reckless abandon believing that stocks can grow to the sky and the upside trend in the market for the last 10 years will never stop.

The red circles highlight the complacency in the stock market when traders are at euphoric levels tripping over each other to buy equities at the ask. The green circles indicate rampant fear and panic during a stock market selloff and when you want to buy equities as the blood flows in the streets.

The stock market top can occur coincidentally (right now) with the low put/calls or in the days ahead, sometimes several days ahead. Thus, the SPX may have enough juice and momentum to print that all-time record high at 2873 only about 15 points away before the complacency sends stocks south.

How far will stocks pull back? Looking at the S&P 500 chart, let's assess the prior selloffs. They are 202 handles in March, then 80 in April, 82 in June and about 45 and 42 handles for the recent modest selloffs. So the drop in the SPX, from wherever the top occurs in the near-term, can be from 40 to 200 handles, with an average of about 90 points. Thus, with Keystone sticking his index finger in the air, the pull back will likely be about 40 to 90 SPX handles from the top that should occur any time over the coming days.
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