CPC Put/Call Ratio Daily Chart

The CPC put/call keeps drifting sideways for the last two months never properly resulting in an upward move above 1.20 to truly establish an attractive broad market bottom. In the low 0.7's, traders are complacent, without worry or fear, that is where a market top occurs. Conversely, fear and panic appears above 1.20 and that identifies a proper low in the markets and an attractive entry area for any longs on the long shopping list. Markets topped in September at 0.68, then the mid-November bottom at 1.21, barely moving into panic mode, actually not much fear and panic at all, then the late November market top that resulted in the trap door 35-handle drop in the SPX in a one-day period. Fear and panic was not in place when 2012 came to a close, traders remained more in the complacent camp although tensions were growing at 1.10-ish, and that is where the fiscal cliff resolution occurred, and then note the immediate drop to complacency at 0.70-ish in early January. Traders know that politicians are weak and cowardly and will always kick the can so it is best to be complacent and not worry about anything since the markets will be continually propped up with phony money printing.

So a sideways confusing malaise continues. The CPC has moved up over the last month, which should correspond to the broad indexes selling off, but alas, the markets are moving up, one of the many mixed signals these days hinting that all price discovery is lost in the markets due to the obscene monetary intervention. This creates an uneasiness moving forward. The green and red circles show the 8/34 cross which showed the market selloff beginning in late September 2012, then the rally in mid-November, then the late December selloff into the fiscal cliff resolution which was confirmed with the green circle in early January. Interestingly, the last circle is red and says markets should be selling off for the last two weeks. Well, someone forgot to tell the markets, as they move higher.

The expected relationship should return. Projection is a spike higher in CPC to occur moving forward, up over 1.20. which will identify an attractive long entry area for markets.  The move may mimic the fractal from October into November, an expansion-type upward move.  Markets are not attractive until you see panic and fear in everyone's eyes at 1.20, 1.30, 1.40 perhaps higher. It will be a short-lived spike when it occurs. The broad indexes have to move lower for the 1.20+ numbers to print. Keep fine-tuning the long shopping list and then wait until you see the whites of their eyes. 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 2/15/13 at 5:05 PM: The CPC tumbles to 0.83 in the Thursday session, which touches the upward-sloping lower trend line shown above. Traders remain very complacent as markets continue to print new highs. The sequestration will occur in only 13 days and both political parties say it will happen. All those cuts and a slash to GDP cannot be good for markets, but, markets float higher, and not on a wall of worry, but rather on a wall of optimism and knowing that the politicians always kick the can and save the day.