CPC Put/Call Daily Chart

For Keystone's CPC tool, readings in the 0.7's show that the majority of traders are complacent and happy with no worry that markets will ever go down. And with the recent market action you see the result of this complacency.  The markets have been sorting out this three month rolling top. The prior low 0.7 prints resulted in market pull backs but the pull backs were only slight.  Markets typically must swing back to the fear side before a more substantive rally can take hold and that number would be 1.2 or higher.  The CPC has not been above 1.1 since December, when the ECB launched LTRO1 starting the latest quantitative easing market-pumping rally. Markets will continue along in a sick funk until the CPC prints above 1.2 and higher. This will signify that fear is back in the markets so a rally will begin.  Of course in the very short term time frame, days ahead, if the markets bounce, the CPC may pull back lower.

The idea to understand is that the bullish traders and markets have been partying all year long, remaining complacent and having no fear at all.  Markets need to sell off until fear can identify a bottom in place, and that market bottom will correlate to CPC 1.2 or higher which may occur in the days ahead or perhaps not for a few more weeks. Simply monitor the chart daily. 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.