CPC Put/Call Ratio Daily Chart

The CPC put/call ratio is up into the panic and fear area above 1.20 so a near-term market bottom is on tap at anytime in the days ahead. The previous CPC chart highlighted the move above 1.20 where a market bottom would be expected at anytime but instead, the stock market mini-crashes and the CPC explodes to multi-year highs at 1.69.

Fear and panic is prevalent. Traders are buying put protection with total disregard for price. Investors are wringing their hands worried that the end of the world is at hand. Of course this is when stocks recover. The CPCE is elevated well into panic and fear territory as well and ditto the VIX that catapults to 30. All three signal a near term market bottom at hand. Interestingly, however, everybody and his bro are calling for a bottom so it may take a couple or few days more to shake out.

The central bankers control the stock market so all eyes and ears are focused on China. The SSEC Shanghai Index begins trading at 9:30 PM EST (Sunday evening in the States) and the question is whether the PBOC will step in to defend the 3500 level, or not. If the PBOC provides stimulus, the bottom is likely in for stocks and a relief rally will begin. If the PBOC remains quiet and the SSEC fails below 3500, then a cascading global stock market rout will likely continue to begin the week.

Nonetheless, the fear and panic tells you to nibble on long plays since a tradeable bottom is very near. It may happen at Monday's opening bell but if not, is likely to occur say by mid-week. The market bottoms are usually 'V' events so once the recovery rally begins stocks may rocket strongly higher.

With a higher VIX, stock market moves will become more dramatic intraday and day to day so 200 and 300 point, and more, moves in the Dow may be common for the days ahead. Strap yourself in. It would not be surprising to see a big sharp recovery move in stocks to knock your socks off, but then another quick reversal to the down side of many points, then a reversal again to the upside with lots of points, all occurring this coming week. 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.