CPC and CPCE Put/Call Ratios Daily Charts; Significant Near-Term Stock Market Top At Hand

The Federal Reserve wine is flowing like water. Nobody expects stocks to ever go down again since the central banks will print money forever. Wheeee! Whoopie! It is hard for long investors to see the computer keyboard because their euphoric tears of joy and good fortune are fogging their vision. They are about to experience something that will make them really cry.

This complete fearlessness and rampant complacency in markets is evidenced by the low CPC and CPCE put/call ratios. Keystone has posted this chart a couple times over the last couple weeks. The stock market has popped +5% since the complacency started to register which is a record gain under such circumstances; it does not even resemble any prior data. This hints that the central banker liquidity is the top game in town. Always remember, the central bankers are the market. Traders do not even look at fundamentals anymore since stocks will go up forever on central banker largess. Of course, you know what happens when traders have their chests puffed out, bragging about long stock positions, throwing darts at the stock pages to pick things to buy, yes, they will receive their heads on a platter.

Timmy Trader was spooked last week and sold his longs. He was happy on the Thursday selloff but the big Friday rally made him regret the selling so he quickly reversed course and bot twice as many long positions. Aunt Agatha, who live a frugal life, is afraid of missing out on all the action and since she needs more money for retirement, she took her life savings, that was balled up inside an old orthopedic shoe, and bot Apple stock. Flint Flam, the local 22-year old financial manager, that has a walk-in office next to the laundromat, says business is fantastic. Lots of folks, especially seniors, want in on the stock market action. Flam says he is suggesting a diversified portfolio of Apple, Amazon and chip stocks. He tells the clients that chips is a nickname for the semiconductors and all the towns people are impressed with his vast knowledge. He also says the word 'barbell' a lot. People do not understand what it means but they say it sounds like he knows what he is doing. Miss Emily, the retired librarian that lives in the two-room bungalow at the edge of town, gave her life savings to Flam and he said he is investing it all in Netflix stock.

Yes, it is the silly season. The lower VIX and higher NYMO also signal the near-term top that should occur at any time. The bulls are trying to keep things elevated into Fed Chairman Powell's press conference on Wednesday afternoon but this turd can be flushed at anytime. As previous charts show, the SPX hourly and daily charts are agreeable to a spankdown now although the SPX weekly chart still has upside juice available. Things will have to play out over the coming month but potentially a big flush lower occurs now, with a rapid V recovery back up and then, when the SPX weekly chart goes neggie d, probably late this month, it is likely over for the stock market for the year ahead and perhaps a lot longer. The entire stock market castle is built on top of central banker sand. 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 Wednesday Morning, 6/10/20, at 6:58 AM EST: The SPX pulls back a modest -0.8% on Tuesday. The CPC plummets to 0.60 this week now at 0.70. The CPCE collapses to 0.37, wowza, now at 0.40. Both put/call ratios are at multi-year lows. Aunt Tabatha, typically a reserved blue-haired gal, throws caution to the wind and performs a striptease on the conference room table. Tabatha tells her colleagues that she invested her whole life saving in the quadruple 4x long ETN for the tech sector and she will be able to retire next year. Uncle Mike could no long sit by watching everyone make money hand over fist in the stock market. Mike digs up all his gold coins and gold bars from the backyard, much of it in old Maxwell House coffee cans, and took it to the broker in town. Mr Chisler, the money manager that has an office between the laundromat and beer distributor, invested all of Mike's money in Amazon and Apple stock. The 22-year old Chisler told Mike it is important to stay diversified. Hang on to your hat. There are exciting times ahead that will likely make the bears smile. Fed Chairman Powell speaks today so he can send markets either way. All joking aside, make sure you have short protection, volatility will spike at anytime (do not play any volatility ETF or ETN; they are all flawed instruments)..