CPC and CPCE Put/Call Ratios Daily Charts; Excessive Panic and Fear Signals Near-Term Stock Market Bottom in the Days Ahead

Traders and investors are worried sick about the stock market. Fear and panic is rampant as evidenced by the elevated CPC and CPCE put/call ratios. Traders have thrown out the baby, the bathwater and the kitchen sink itself. Franky, a seasoned trader, jumps from his chair proclaiming that he cannot take the pressure anymore then falls to his knees sobbing swearing he will never buy a stock again. The whitecoats come and place him in a straight jacket ushering him away to receive mental help. The panic and fear in markets is commonplace.

Investors are afraid the bottom is going to fall out in the stock market and are frozen with fear unable to hit the buy button. The high put/calls indicate that a bottom will occur for the stock market in the near-term; the days ahead. As a trader, you always want to run into the fire instead of away from it. Tomorrow is Friday and Housing Starts and Permits are uber importante so they may serve as a catalyst.

The SPX (stock market) is at 2848 and may continue to test the 150-day MA support at 2850, or venture lower to test the SPX 10-month and 12-month MA's at 2806, or 50-week MA at 2804, or 200-day MA at 2797. The SPX may pop from any of these levels due to the elevated put/calls. So the SPX would be expected to place a bottom say between Friday (tomorrow) and the middle of next week.

One way to consider playing is to buy some index longs tomorrow. Then on Tuesday or Wednesday buy some more, and then on Friday next week buy the final scale-in long position. Sit on that for a week or two and it should ride the upside. Don't get greedy in these choppy markets. Of course, any President Trump tweet, China message or central banker comment can change things in a flash. Keystone will be placing some index longs tomorrow as explained.

Looking at the support levels, the SPX has been teasing the 2822-ish level intraday during this month. Obviously, a breach of the 2822 level is big trouble and sets up the test for the 2797-2806 support gauntlet. Price may choose to bounce right now from the 150-day, or sag a bit to test the 2822-ish area again where a bounce or die decision will occur. The elevated put/calls say bounce.

In addition, the NYMO is down to -52 (check the chart in a little while for today's number) perfectly positioned to pop higher with stocks moving higher. If the NYMO goes further negative that only sets it up more for the bounce. 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 7:10 PM EST: The NYMO finishes the Thursday session at -43. NYMO printed down at -80 a few days ago this -40 to -80 area consistent with where a near-term stock market bounce may occur.