CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts; Island Reversal; Traders Becoming Complacent Again

Keystone highlighted the panic and fear in the stock market with the elevated put/call ratios (green circles) calling for a rally in the days ahead, which occurs. The peaks and valleys with the 21-day MA for CPC and CPCE are helpful in identifying stock market tops and bottoms. Interestingly, traders go from excessive panic and fear back to complacency in a heartbeat. The markets are erratic, unstable and jumping to and fro on the latest news bites concerning central bank intervention or the ongoing trade wars.

The PBOC just announced a triple R cut. The reserve requirement ratio (RRR) is cut to encourage more lending and help to support their flailing communist economy. S&P futures are up +9 about 3 hours before the US Monthly Jobs Report and 4 hours before the opening bell for the regular US trading session. The central banks are one-trick ponies continuing to print money to support the global stock markets and protect the wealthy class, or at least provide cover time for the wealthy to cash-in on their one-decade gift of gains and place the profits in notes and bonds unconcerned about negative yields (since the money was basically handed to them via the central banker largess for the last near-11 years).

Stocks rally due to the excessive fear and panic shown by the elevated put/calls and the SPX breaks out above the purple channel at 2822-2945 and the channel created by the 50-day MA resistance at 2945, which now is support, and the 150-day MA support at 2875. Price prints a gap-up through the gap-down area from early August thus creating an island reversal pattern (thick blue lines). The thin blue circle shows the island that the S&P 500 has been marooned on during August. The potential 2-leg bear flag pattern mentioned last week is nullified with the higher breakout; bears needed a breakdown from the 50-day MA at 2945.

It is not typical to see markets go from panic and fear immediately back to complacency. The central bankers are sick b*stards that have destroyed all price discovery in markets as well as the expected business cycles over the last decade. The central banks have created the longest economic expansion in US history with their Keynesian printing presses. The Fed and other global central banks are sick pups. None of this will end well. But most importantly, the wealthy got theirs. Payback, however, will likely not be as pleasant since the recession will likely trigger the start of a class war in the United States. The wealthy will have targets on their backs as the social unrest will likely turn violent. This is the future world that the central bankers have created; there will be a couple decades of turmoil ahead.

The CPCE collapses to 0.53 at levels not seen since the July top was printing. The CPC is venturing down into that sub 0.80 area which will signal complacency and a stock market top at hand.

The US Monthly Jobs Report is imminent so all bets are off until that data hits the wires. As usual, the wage data is more important than the headline numbers. Inflation, that the sick central bankers have tried to create for the last decade, cannot exist without wage inflation. However, the continued disinflationary environment will embolden the Fed and other global central bankers to continue their obscenely dovish monetary policies.

Keep an eye on the CPC to see when it goes sub 0.80 and then you have to be aware that the stock market is topping in the near-term. There is a gap-fill needed at 3020. The bears may consider letting that gap-fill take place which will button up the top-side, and then if they march stocks slowly lower from there, the downside and pending bear market may continue for a couple years.

For now, the stock market remains wine and roses and traders are returning to the complacent mood. Traders and investors always know that the Federal Reserve and other global central bankers will always print money and support markets to protect the wealthy class so there is no reason to ever worry about a substantive pullback or bear market for stocks. As they say in Brooklyn, "Good luck wit dat."

China rides to the rescue today with the RRR cut but it is surprising that the S&P futures are not up higher now up only +5. 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 6:35 AM EST: Russia's central bank cuts its key rate. Of course they do. The race to the bottom continues around the world. Countries continue to cut rates and lower their currencies to gain economic advantages but it results in everyone slitting each other's throats. Protectionism extended the Great Depression in the 1930's.