CPC Put/Call Ratio and SPX S&P 500 Daily Charts; Rampant Complacency and Fearlessness Forecasts Stock Market Top Going Forward

Stocks break-out of the diamond pattern to the upside in a two-day bull orgy party. The bullish sentiment remains and actually explodes into euphoric optimism with most pundits proclaiming that stocks will rally big going forward.

The first leg of the rally going into the diamond pattern was 3825 to 4100 or 175 points. Thus, the break-out from the diamond from 4100-4125 targets 43 hundo. The SPX is at 4200 now.

Sucka's are chasing the rally higher. The last legitimate bottom in the stock market was in March when the panic and fear moved above CPC 1.20. Buy when people are panicking with their hair on fire. The opposite is occurring now. The put/call charts have been posted over the last month. This low CPC and CPCE behavior is atypical and reflective of the multi-month choppy slop with stocks.

The CPC drops to 0.82 verifying rampant complacency and fearlessness in the stock market. Bulls are drunk as skunks buying stocks without any worry or fear (even though they wax fear and worry when speaking; watch what they do not what they say). Stocks are topping-out despite the pundit talk.

A big market mover in recent days is the debt ceiling discussions by the corrupt politicians. Optimism in an agreement is in play sending stocks higher but if McCarthy or Biden cough, and it sounds like they said the deal's off, stocks would probably retrace. This baby stuff will continue for another 2 weeks and may delay the topping process.

The stock market rally is also aided by the Artificial Intelligence (AI) hype and euphoria. Semiconductors are treated as gold with stock prices rocketing higher in names such as NVDA. It is not a broad market rally; it is an AI orgy. Everyone's in the jacuzzi drinking wine and having fun buying any chip stock with a heart beat.

Don't worry about AI. It is the latest favorite flavor. Remember nanotechnology was the big worry? Then it was bitcoin and blockchain? Then it was 5G? Now it is AI? Next it will be 6G or whatever they will call it. Xfinity (Comcast; CMCSA) is bragging about 10G. Much Ado About Nothing like Billy said. Pull the plug out of the wall and use a pen and paper if you are worried about AI. What you should be extremely worried about and focused on going forward is what all humans need for survival; food and water for sustenance and shelter and clothes for protection.

The CPC predicts a significant stock market top to print any day forward. As far as timing, simply watch for neggie d to form on the SPX 2-hour chart to call the top. The wildcard forward for a couple weeks is the debt ceiling negotiations that will sends stocks to and fro.

The utilities have failed bigtime and forecast a major stock market top to print between now and the next few weeks and the down move will be significant. The utes hint that the stock market, when it begins committing to the downside, will probably drop from -10% to -30% or maybe more. The utility warning should be respected.

Keybot the Quant remains long and is tracking XLF 32.79 as the bull/bear line in the sand today. As the banks go, so goes the market. Stocks will take another leg higher if XLF rallies past 32.79 today but if price has trouble getting up through this level, the downside will begin for the stock market. 

The SPX weekly chart is not inspiring with the highest SPX price since August (9-month high) but the histogram, stochastics and money flow are negatively diverged. The MACD line is flat with a slight upward bias ditto the RSI.

Since the CPC wants to see a top, what may occur is some backtracking on the debt ceiling discussions over the weekend so stocks will weaken. Fed Chair Powell speaks today at 11 AM EST comically right as the new moon peaks for the month just before noontime. Stocks are typically weak moving through the new moon each month and strong when moving through the full moon.

Thus, stocks may drop for a day or few, then the Congress *ssholes will kiss and make up and stocks will have lift again. This will set up the more significant top over the next 1 to 3 weeks that will begin a major slide south as per the utilities. Time will tell. Simply watch the charts and adjust the timing or analysis.

That 4300 target lingers for the diamond pattern so it must be respected and may occur over the next couple weeks but the charts will tell you if that is on the table or turns into a pipe dream. Watch for negative divergence on the SPX 2-hour chart and that will be worth bringing on shorts since the complacency is off the charts. 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 7:48 AM EST: XLF is trading at 32.84 in the premarket. It tagged 32.84 a short time ago. The bulls are puffing their chests out and know what they need to pump higher; the banks and financials. The XLF 32.79 bull/bear line in the sand, identified by Keybot the Quant, tells you who wins going forward.

Note Added 8:37 AM EST: XLF is at 32.89 with the bulls high-fiving each other and throwing confetti. Nope, check that, now it is 32.88. Nope, now 32.87. Looks like lots of drama is ahead for the XLF 32.79 bull/bear line in the sand today.

Note Added 10:04 AM EST: XLF pops to 32.91 on the open and is now at 32.85 above the critical 32.79 line in the sand. Bulls rejoice but we are only talking pennies. Let the day play out. Bring up the SPX 2-hour chart. The 10 AM candlestick just started so there are matching price highs over the last few hours but the RSI, histogram and ROC are neggie d. The stochastics are way overbot in the stratosphere at 96% agreeable to a pullback. The MACD is long and strong so there is one more jog move likely before she tops out (down-up in the hourly time frames). Keystone bot some SDS. If you are long, it would be wise to take on some short ETF's for a likely drop lower for a few hours or day or three. The debt ceiling happy talk may save the day but technically, the SPX 2-hour is almost at the top. A jog move down, then back up for the top, places the top at 2 to 4 hours out so perhaps after lunch, this afternoon, maybe on Monday morning if things stretch out. This would jive with the new moon weakness. Also, perhaps Pope Powell stutters in his talk that begins within the hour creating angst. You do not have to guess. Simply watch the 2-hour and when the MACD line tops out and goes neggie d joining the other chart indicators, that is the top in the stock market in this very short term time frame useful for day and swing traders.

Note Added Saturday Morning, 5/20/23: Stocks live by the debt ceiling sword and die by the debt ceiling sword. The top did not form properly on the SPX 2-hour chart (MACD line is still sloping higher) because the debt ceiling talks stall and stocks turn south. XLF gave up the ghost ending the session down at 32.60 so the bulls are not receiving the needed help from the banks.