CPC Put/Call Ratio Daily Chart

CPC put/call serves as a fear gauge. Low numbers at 0.7 indicate compacency, a total lack of fear, markets are going up forever attitude--that results in a broad market selloff. A CPC above 1.2 and towards 1.4 or higher indicates fear, panic, worry, a sell everything and ask questions later attitude--that results in a broad market recovery. Obviously we are at the complacent side and this is verified by the Investor's Intelligence Survey showing high levels of bullishness by traders.

The peak of bullishness and complacency was three weeks ago with the CPC under the 10 MA under the 17 MA under the 21 MA under the 25 MA (blue box), a ribbon verifying the extreme negative number at 0.70. Note how the blue box now shows another low number but the MA's are tangled like spaghetti. The loss of the firm ribbon posture in the recent blue box signals that the CPC wants to move upwards which is bearish for markets.

Note how the CPC 1.10 level is the same as a couple weeks ago but the same price high comes with the indicators wanting more upside (green lines).  The RSI and stochastics are over 50% which is bullish for price (bearish for markets). The 0.7-ish numbers are used as a signal for when to short the market and the 1.2 and higher numbers are a signal for when to go long the market.  Thus, the CPC has plenty of room to move higher (broad markets lower) before signaling time for a market rally.

Two moving average crosses are important when monitoring the CPC; the 10 MA and 21 MA cross and the 17 MA and 25 MA cross. The 17 MA is above the 25 MA which is bullish for CPC but bearish for the broad markets.  The 10 MA, however, is 0.002 short of crossing up and over the 21 MA so watch this on Monday to see if the 10 MA moves above the 21 MA signaling further moves higher for CPC and correspondingly more selling in the broad markets.  This chart shows fear creeping back into markets as the CPC moves upwards.  Broad market selling should occur until the CPC starts to print above 1.2 which will place traders on notice to look for a market bounce. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.