CPC and CPCE Put/Call Ratios and SPX S&P 500 Daily Charts; Stock Market Top is Near

Remember last week, Keystone pointed out the low CPC put/call but the CPCE was not yet drifting lower; now it is. The expectation was for a lull in the upside price action but then a recovery until both the CPC and CPCE signaled complacency. Both of the put/calls have now slumped to multi-month lows. Traders are singing songs and yelling, "Whoopie, wheeee." Bullish traders are drinking Fed booze and BOJ sake anticipating a robust and wild party on hump day this week (FOMC Decision) as the rates are slashed again (BOJ is on tap Thursday). Long Live the Central Bankers! Hip, Hip, Hooray!

Traders celebrate the modern day money God's that can print cash out of thin air. Powell was in the basement of the Eccles Building this weekend running a printing press himself. Stocks typically rally into the Fed decisions about 80% of the time so the expectation would be for buoyancy in equities into hump day. Considering the ongoing turmoil, will this seasonality hold this week?

On Wednesday, will the Fed push back at the never-ending dovish perception of traders and investors who always expect infinite money-printing? Fed funds futures indicate a 91% chance for a rate cut on Wednesday. When the percentage goes above 80%, a rate move is guaranteed since the FOMC will not want to disappoint the market. There is only a 26% chance for another cut in December. As usual, Chairman Powell's words and comments will be important with traders gauging whether he is flapping dovish or hawkish wings.

The new moon peaked on Saturday night so no wonder the special forces raid and take-down of the Arab terrorist al-Baghdadi played out. The US has superior night vision technology so the covert raids take place at the darkest time of the month; the new moon. Stocks are typically weak moving through the new moon but S&P futures are up +9 and the VIX at 13.00 about an hour in front of the opening bell for the regular Monday trading session.

The SPX is set to take out its all-time high at 3027.98 and all-time closing high at 3025.86 from 7/26/19. This price action should only serve to send the put/calls even lower.

Traders are drunk as skunks throwing darts at the financial pages to pick stocks. Everyone laughs that stocks will always go up and if not, the Federal Reserve will always step in to save the day. Even Timmy Trader has joined the bullish bandwagon guzzling down ECB champagne and telling all his clients to go long with reckless abandon.

This week should prove interesting. The put/calls are at low levels consistent where a near-term stock market top will occur. Interestingly, the put buying that has occurred in recent days comes with traders not willing to sell any stocks (usually extreme put buying goes hand and hand with the stock market falling). This reinforces the majority belief by traders and investors that stocks will continue higher going forward into the end of year and beyond. Investors had expected a little pull back a week or two ago so they bot some protection but now they are not even buying protection. They say why bother since stocks always go higher? Investors now expect stocks to go up in the near-term and over the long-term, actually over any term. Traders are fearless and complacent.

What do you think will happen? Heavy-hitter's such as GOOGL and AAPL report yearnings this week; will Tim Cook lay an egg? Apple likely dictates whether the overall stock market goes higher or lower in the days and weeks ahead. Alphabet (Google) reports tonight. 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 8:47 AM EST: President Trump brags that the stock markets will print more record highs today and there is nothing but rainbows and blue skies ahead. The 10-year yield is up to 1.84%.

Note Added 8:52 AM EST: Futures pop when President Trump says the Phase 1 US-China trade deal wil be bigger than expected. Trump loves to pump the stock market higher. The S&P futures are up +12 with the VIX at 12.88, a 12-handle, so the new record highs are on tap at the opening bell. King Trump decrees! Oil flat. Copper and silver up a hair with gold down a hair. The 10-year yield is at 1.84% up 16 bips this month down 123 bips on the year. European stocks are higher.

Note Added 8:57 AM EST: S&P futures +13. VIX 12.84.

Note Added 9:35 AM EST: The S&P 500 prints a new all-time record high above 3039 and heading higher. Traders are tripping over each other to buy stocks. Bears are running for their lives creating a short-covering rally. The SPX goes parabolic now above 3041 up 19 points, +0.6%.

Note Added 9:39 AM EST: The S&P 500 prints 3041.81 finally taking a pause to catch its breath. The NDX prints a new all-time record high at 8089.71. Oddly, the VIX is higher at 12.80. You would expect the VIX to be dropping like a rock considering the new record stock market highs. The VIX should be sub 12.65 on its way to an 11-handle. Instead, the VIX floats higher towards 13. Stocks and volatility are both higher so one of them is wrong.

Note Added 7:32 PM EST: The SPX prints a new all-time record high at 3044.08 at 10:30 AM EST this morning, 10/28/19, and also a new all-time closing high at 3039.42. Traders are singing, "Happy Days Are Here Again!"  The CPC is down to 0.79 and the CPCE collapses to 0.51 signaling complacency, fearlessness and a firm belief that stocks will never sell off. Traders are sniffing Fed glue, main-lining BOJ heroine and smoking ECB crack celebrating new record highs in stocks that they believe will continue forever without interruption. GOOGL lays an egg with earnings. Alphabet is spending money like drunken sailors. GOOGL trades lower in the afterhours.