CPC Put/Call Ratio Daily Chart

CPC put/call shows a dramatic drop on Friday since Bullard says the Fed plans on throwing money out of helicopters indefinitely.  The complacency continues in the markets. Look at all the touches in the range under the low 0.7's which indicates market tops (red circles). The bears are missing in action, the last print above 1.2 was at the exact mid-November bottom but it was only a tiny smidge above 1.2.  The wine is flowing like water and traders simply accept the fact that traders have zero fear and worry. They know the Fed will keep pumping and pumping, passing out crack cocaine on every corner for the market junkie so there is no reason to worry.  No wonder the Fed at least, is worried. Last Wednesday afternoon the FOMC minutes show concern over the excessive risk-taking now appearing in markets. Well, all they have to do is blame themselves. Chairman Bernanke will provide at least two talks this week to say asset bubbles are not being created. That ought to be interesting.

Markets will meander moving forward. In a nutshell, it is not attractive to bring on longs, and be comfortable about buying the market long, until the CPC spikes above 1.2, 1.3, maybe 1.4 and maybe 1.5 like the August 2011 crash that placed a couple year bottom.  As a possible path, it is good to continue to raise cash, take profits, and sit and wait. At CPC above 1.20 an initial nibble on long positions can be started. People will be getting worried about the markets above 1.2. At 1.3 another scale-in for longs can be made as strong panic is in the air and another at 1.4 or higher numbers. If the spike up above 1.2 reverses quickly, it will be like the mid-November bottom, so the rest of the longs can be put on for a long intermediate-term recovery rally in the markets. Until 1.2+, however, the markets are not attractive from the long side. Anyone long now, or holding longs, must question those positions and decide if those stocks are worth holding for a long time forward, or not, since a substantial market pull back in the coming days and weeks may create regret.  The move above 1.2+, when folks are jumping out of windows, hopefully only first-floor windows, is the time when the smart money will go long. 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.