CPC Put/Call Ratio Daily Chart Signals Significant Market Top

CPC put/call prints another uber low 0.70 number. This is an important development since if there is any apprehension and sleepless nights ongoing concerning holding market short positions after the Tuesday melt-up, this chart allows the short-sellers to sleep like babies. The low 0.70 number verifies the complete complacency and lack of fear in the markets currently. The bullish euphoria is now at fevered pitch, there are very few sellers in this market, the boat is fully loaded on the bullish side and traders expect the markets to continue upwards non-stop. The iPad3 is available today which helps boost the bullishness higher and perhaps identify the peak of this broad market party action.

The July 2011 top before the August waterfall crash was identified and forecasted with a low CPC at 0.7-ish just like now. Keystone has posted this chart several times over the last two months, ever since the mid-January uber low. The January low CPC print resulted in the minor late January market pull back. The other red circles resulted in pullbacks as well, but they were minor since the money printing and LTRO1 keeps pumping markets higher. Quantitative easing is a powerful force. The market sell off that just occurred to start the month of March was identified by the 0.72 and 0.75 low readings.

The CPC cannot directly tell you the exact day that the markets will begin the sell off.  But what it does say, once a 0.7-ish number is printed, is that typically within 0 to 10 trading days the markets will experience a sell off. Considering the uber low reading now printed, the selling is projected to be strong and substantial with a market move lower that will surprise the majority of traders. An uber low 0.7-ish number is very significant. Looking back, during this two-month period where the CPC has printed these low readings, the SPX has added about 80 handles, about 6% to the SPX.  To place this discussion in pespective, the coming market move down is not expected to be a nominal few percent but rather a strong move down that will likely far exceed this recent 6% up move. For the sake of assigning numbers, this low CPC should result in a 10 to 20% market sell off. Interestingly, if this occurs, it will set up Chairman Bernanke perfectly for QE3 intervention.

The low 0.70 is an important development and signals a significant market top now in place. The CPC chart is unlike other charts in that it does not go to zero, this 0.7 number does represent the lows available for the CPC, there is not much left on the downside if anything.  Traders are off-the-charts bullish so at this level of euphoria there is simply not much further room to become even more uber bullish. Note also that the indicators for the CPC are all positively diverged and at or near ovesold levels. Projection is for a strong market down move to begin at anytime, the strength of the move down will surprise traders. 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.