CPC Put/Call Ratio Daily Chart

The selling in stocks was intense this morning but interestingly, the CPC actually moved lower. Traders were ready, willing and able to go long the market. There was no capitulatory selling, instead, traders were anxious to buy the dip. Trader complacency is also verified by the low VIX under 14. The chart shows the last 5 bottoms in the SPX price. Despite the big losses in stocks, traders were not panicked or fearful with the CPC at 1 (palpable fear occurs above 1.20).

The CPCE chart is the same idea although at 0.83 it is a bit more agreeable to a bounce in stocks than the CPC. That sub 0.60 print in the CPC identified a market top, which occurs, but the expectation would be for the selling to continue until the CPC moves above 1.20, at a minimum. Thus, something is fishy. Traders continue believing in central bankers and likely think that the rate hike will not occur in September. The chart hints that there is unfinished business to the downside with stocks.

Traders need to become fearful not like today where the majority of traders were planning to buy the dips. Stocks could rally for a couple days but further downside selling would be anticipated until the CPC moves above 1.20 where a more firm market bottom would be placed. 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.