CPC Put/Call Daily Chart Complacency Rules Markets Forming Significant Top

The CPC is now printing in the 0.7's firmly signaling that traders are complacent and have no worries at all about the markets going down.  With the Bernanke and Draghi puts underneath the markets, where the central bankers vow to do whatever it takes to support the markets, traders are drinking the Koolaid, and the CPC shows that there is no fear about a market sell off, instead, the vast majority of traders expect markets to continue higher.  Of course, when traders are fully loaded to one side of the boat, the markets do the opposite.  The red squares show significant recent market tops, all occurring when traders were complacent and worry free thinking that markets will not go down. As would be expected by this contrarian indicator, the markets topped and rolled over at each red square.

Conversely, once markets sell off and the broad indexes tumble lower, traders become worried, novice traders tend to sell at the bottom, the exact wrong time.  They do that out of fear thinking that the markets will not recover and that the markets will continue falling.  The black squares show where the market fear was rampant, and, as expected, the markets bounce instead, punishing the majority of traders that were shorting the markets thinking the end of the world was at hand.  Projection is that a significant market top is now being formed which should result in a roll over and strong downward move for the markets in the days ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your finanical advisor before making any investment decision.