CPCE Put/Call Ratio Daily Charts; Significant Stock Market Top Watch Continues

The current price action in the stock market is epic. Major economic history is being written every day and these times will be looked back on as a significant period of time for global markets. The multi-year lows in the put/calls signal a significant stock market top at hand. The initial uber low in the CPCE appeared in mid-November and the negative divergence in the charts provided a short-term pullback for the stock market but the US-China trade deal hype and never-ending Fed put catapults stocks to more new all-time record highs. Traders are singing, "We're in the money" while buying any stock with a heartbeat. The SPX prints a new all-time record high at 3298.66 and new all-time closing high at 3289.29 on Wednesday, 1/15/20.

The uber low put/call ratios sub 0.50 verify the ongoing fearlessness and euphoria in the stock market. Traders and investors are buying big blocks of call options believing that stocks will go up forever on central banker largess (moral hazard). At the same time they shun put options and laugh at any fool that thinks stocks can pull back in any significant way. The bulls slap each other's backs and opine that even if stocks drop that will be a great buying opportunity. The global central banks, led by the four horseman of the Apocalypse, the Fed, BOJ, ECB and PBOC, have created market nirvana and anyone buying equities never has to worry about losing money ever again. Look at the blue skies and wow, a rainbow, look, it leads directly to the NYSE.

If you remember your fractions from math class, when the numerator, the top number in the fraction, the puts, decrease, that will send the overall ratio number lower. When the denominator, the bottom number in the ratio, the calls, increase, that will send the overall put/call ratio lower as well, hence the multi-year lows and off-the-charts euphoric joy is verified. Humorously, everyone is happy because they did not yet receive their credit card bills reflecting their Christmas and holiday shopping.

There are other market parameters calling for a significant market top such as the SPXA150R and SPXA200R the percent of S&P 500 stocks above their 150 and 200-day MA's. The VIX fell to 11.95, an 11-handle yesterday on the new all-time highs.

The party is completely out of hand at this point. At the end of the year, traders were staggering around drinking Fed eggnog and buying stocks without a care in the world. As January begins, traders are drinking Fed wine to get rid of the eggnog hangover and throwing darts at the stock pages to buy stocks. Two drunkards at the NYSE proclaim that these are the best of times as they execute large block buying of AAPL, AMZN, GOOGL, MSFT and FB shares.

The CPCE comes down again for another uber low yesterday forming a trifecta bottom, a trio of lows that verify the rampant complacency and signal a significant stock market top at hand. The SPX minute, hourly and daily charts were all set up with negative divergence yesterday to begin the spank down, but the trade deal hype keeps the party going. The neggie d did start to create sogginess but comically, National Economic Advisor Larry Kudlow's team runs to a podium proclaiming that a middle-class tax cut is on the table this year (that is later walked-back). The political and market baby games are comical to watch.

The long-term CPCE put/call ratio chart shows the important stock market tops (red circles) and market bottoms (green circles) over the last decade. The current low put/calls are multi-year lows and correspond to the stock market tops that occurred in early 2010, 2011, the May 2015 top which is likely the last legitimate stock market top, the early 2018 top, the September 2018 top, and the current top, that is if you think it is a significant top. Well, do you?

Stocks elevated into the closing bell yesterday and S&P futures are up +11 about 3-1/2 hours before the opening bell for the regular US Thursday trading session on 1/16/20. The VIX is currently trading at 12.06 only 7 pennies from an 11-handle. Watch your wallet. Plan accordingly. Considering the erratic price action and euphoric highs, you have to be aware that a flash crash may occur going forward. 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.

Note Added 6:21 AM EST: S&P +10. VIX 12.10. Copper +0.5%.

Note Added 8:56 AM EST: S&P 11. VIX 12.07. Volatility drifts lower so futures float higher.