CPC and CPCE Put/Call Ratios Daily Charts; Near-Term Stock Market Top At Hand

Whoa. The markets are moving very fast; it is difficult to keep up. The uber high CPC and CPCE's were touted by Keystone a week ago indicating rampant fear and panic. The blood was flowing on Wall Street the perfect time to buy and stocks did bounce. However, taking advantage of the pop via daytrading or VST (very short term) proved difficult because President Trump tanked the stock market with the shutdown drama. The bounce came but from a lower level. That's the way it goes. Keystone has a few VST index longs that he will have to scale out of this week and flip them short.

Look at those charts. Isn't it something? The stock market goes from rampant panic and fear to excessive complacency and lack of fear in only a few days time. The CPCE tanks to 0.44. That will get your attention. The all-clear whistle is blowing. Investors and traders are optimistic that a relief rally will occur so they are buying calls and going long stocks with reckless abandon. So we go from one extreme to the other.

You can use the 1.20 and 0.80 levels on the CPC as useful turn areas and 0.80 and 0.55 on the CPCE.

So there is a near-term stock market top at hand. Sometimes it takes a few days for the top to print. The top may print right-away on Monday or Wednesday, or later in the week even perhaps next Monday. The SPX 2-hour chart will say when. Typically, these low put/call's will lead to a drop of 40 to 100 SPX handles. The move down will likely be sharp and fast once it clicks into gear. Remember the UTIL 709 level called out by the Keybot algo. You can use that as a guide. If UTIL 709 fails, the market is likely going to fall apart quick. If utilities rally on Monday, and if copper is buoyant, the stock market will be floating higher.

To identify this near-term pending stock market top, use the SPX 2-hour to see when the indicators roll over with neggie d. You know a big drop is about to occur from the low put/calls and the SPX 2-hour chart should point the way. The MACD line remains long and strong on the S&P 500 2-hour chart so price should make a higher high on Monday. As price comes up, you can see if the MACD goes neggie d on the 2-hour, if so, and it matches the other indicators already neggie d, the spankdown is at hand, down we go, load up on shorts for the way down.

Obviously, this analysis is only useful for daytraders or those that are trading day to day or swing traders over a few-day or week or so period. Playing the pending drop, scale-in on short side, say with one-third of the position placed on Monday, another third on Wednesday or Thursday and the last third either Friday or Monday to have your full very short term short position in place. The expectation is that the stock market will likely peak this week perhaps mid-week. The new moon peaks on Saturday and stocks are typically weak moving through this period which would be Friday to Monday. Stocks may begin next week soggy. 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.

Note Added 6:28 PM EST, 12/30/18, Sunday Evening in the States: China gooses the markets with happy talk concerning the trade dispute with the US. President Trump reciprocates speaking optimistically about the talks. S&P futures leap higher to +21. Dow futures are up over 200 points. Traders are singing, "Happy Days are Here Again." The happy news is great for the trade set up discussed above. A pop will help float any short-term long trades higher before they are exited this week, and those positions will be flipped short, due to the low put/calls. A continued rally in the stock market is great since it will provide a nicer level to short from as per the above analysis. Respect those low put/calls. Keep them in mind constantly going forward no matter how much the stock market rallies; short into strength going forward for very short-term trading.