The stock market is spanked lower as per the low CPC and CPCE put/call ratios Keystone highlighted a few days ago indicating uber complacency and fearlessness. When traders get too big for their britches and overconfident, they are punched in the face.
The BPSPX drops to an 11. That is ridiculous. It is an uber low as mentioned in a previous chart. When BPSPX drops under 35 you would expect at least a dead cat bounce. Price came all the way down to 11 a big-time wash-out.
A six percentage-point reversal off the 11 bottom is 17 and BPSPX is at 18.60 so that is a buy signal for the stock market. If the BPSPX pops above 35 that will be a double-whammy buy signal.
Expanding out to the weekly picture as the charts above show, what do you think will happen? The jobs report drops in the morning which may cause turmoil but barring that, or any geopolitical drama or President Trump tweets, stocks would be expected to recover going forward. Scale out of all shorts going forward.
The new moon peaks on Saturday which is interesting since stocks are usually weak through this period each month which would be tomorrow to Monday. Thus, scaling out of shorts may be best since the jobs report may lay an egg tomorrow morning and stocks may remain soggy into Monday.
Otherwise, the stock market is likely setting up for a long rally. The MACD line on the SPX weekly chart, however, is weak and bleak. So the SPX may bounce for a day or three but it will come back down again for another low. The S&P 500 should bottom on the weekly basis say 1 to 2 weeks out. This would jive with the two charts above and then lead to a multi-week rally. 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.
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