CPC Put/Call Ratio Daily Chart

CPC drops into the 0.7's again signaling continued market complacency. In fact, Baron's cover last weekend announced Dow 16,000 around the corner.  The central banker's (CB) continue to pump the equities markets.  CPC numbers in the 0.7's and lower signal complacency and complete lack of fear (created by the CB's) and when market tops occur. CPC numbers above 1.20 and higher signal fear and panic and the time to go long the markets. The previous CPC chart highlighted the low print at 0.68 a couple weeks ago which projected a market top and a sell off from 20 to 100 or more handles in the SPX on tap. The SPX dropped from 1597 to 1538, about 60 handles, not too shabby.  Type 'CPC' in the search box in the right margin to bring up that chart for further study.

So the markets sold off down to SPX 1538 where the bulls staged a recovery rally for the last four days. The green circle on the right at 1.18 identified the market bottom.  The markets have been weighted to the complacency side for the last year with many prints sub 0.75 but on the fear side, not so much. No one is fearful since the CB's pump the markets and will always be there to save the day, therefore, there is no fear or worry about market downside. The CPC printed a hair above 1.20 which marked the mid-November market bottom, however, that is the only print above 1.20 since the large market sell off in May of last year.  The market low a few days ago is cheesy as well with the rally occurring from a CPC that did not even move above 1.20.  This behavior will have to rectify as the days and weeks play out and much higher numbers for the CPC will be needed, 1.2, 1.3, 1.4 and higher, to ring in the fear and panic, and properly identify a more substantive market bottom.

The 20 and 50 MA crosses are interesting since the 20 moving above the 50 identified the September-October top, and the February market top, and now? The blue boxes show the fractals from where the 20/50 MA cross occurs to the high CPC print that signals a market bottom. The left blue box shows the Fall sell off into the November market bottom. The middle blue box shows the February market sell off. Note how when the 20 crosses above the 50 a large drop in CPC occurs, but it is then followed by a large up move for a couple weeks that represents the markets selling off until the 1.2-ish or higher is printed to identify the market bottom.

With the 20/50 cross that just ocurred over the last few days, yesterday results in the large spike downwards, so the coming days and week or two should prove interesting for the stock market. The expectation would be for the CPC to jump higher in the coming days and print above 1.2 in the coming week or two, which means the SPX can be substantially lower, from 20 to 150 handles lower, or more. The markets have not felt fear and panic for about one year's time, which is a long time for markets. As noted by the fake tweet two days ago and over -1% collapse in markets instantaneously, there is not enough geopolitical risk priced into markets. Complacency lulls everyone into a sleepy relaxed outlook on markets, a belief that all dips should be bought and markets will continue higher indefinitely, exactly when they reverse to the downside. 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.