CPC and CPCE Put/Call Ratio Daily Charts

The complacency finally gives way to a tinge of fear. No one is jumping from windows as yet but several traders walked over to see if the window can be unlatched. The VIX spiked higher which verifies the put/call ratios where traders are starting to wake up and realize that markets can actually go down. That said, President Obama will pump the markets mid-week after his Tuesday night State of the Union speech, and the Fed is on tap Wednesday, so they will be pumping the stock market. The put/calls are now up to where the cheesy market bottoms have occurred during the autumn period. Thus, another cheesy bottom may occur allowing markets to recover near-term.

The complacency has been ongoing for many weeks and months so traders will continue to drink the Koolaid. The Dow is down more than -4% off the top and the SPX about -3% off the top not even half-way towards the -10% level that identifies a market correction. Since the complacency has been so obscene, for months, with folks blindly buying the long side with zero fear or worry, a more substantive move towards fear and panic would be anticipated going forward.

Nibbling on the long side for a quickie snap-back rally trade may be prudent once the CPC moves to 1.15, 1.20, and higher, and/or, the CPCE moving above 0.75 and higher, but overall, the expectation is for the broad indexes to drift sideways to sideways lower as the weeks move forward. The put/call ratios may have identified a multi-year market top as has been discussed here for the last couple months. The next couple months are key. 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.