The stock market gaps higher on Friday after the US Monthly Jobs Report. The S&P 500 prints a new all-time record high at 3066.95 and new all-time record closing high at 3066.91 on Friday, 11/1/19. November starts off with euphoric highs.
The put/calls plummet. Traders say there is no reason to buy protection since stocks never go down (traders and investors buy stock and call options expecting lots more upside ahead for equities; this behavior sends the put/call ratios lower since the rising call number is in the denominator which creates a smaller ratio number). The central bankers are the market and they keep printing money and promising more dovishness ahead so there is no reason to ever worry about a stock market selloff. Over 20 central banks around the world are implementing dovish monetary policies.
The CPC collapses to 0.74 and the CPCE drops to 0.53. Remember earlier in the week, Keystone wanted to see both put/call ratios printing low numbers and the red circles show the uber complacency in play. Traders are happy over the Fed rate cut and optimistic about US-China trade negotiations. China says it has reached a 'consensus in principle' with the US on a trade deal. Okay, that sounds great, but what does it mean? It means more of the same.
The only reason China is constructively working towards this so-called phase one deal (although President Trump said he wanted a big deal or nothing in the past) is because of the need for ag (agricultural) products. Dictator Xi is concerned because he has 1.4 billion mouths to feed. Comrade Xi also knows that past Chinese dynasties crumbled mainly due to food scarcity and food inflation.
Hungry people begin rioting and protesting which leads to violence, blood and death, and to dynasties, dictatorships and governments collapsing. In 2005 in Louisiana, USA, during Hurricane Katrina, humans turned into animals within days due to lack of food and water. After all, humans are animals, educated animals; perhaps too smart for their own good, or survival.
Thus, Soybean Donny has a good chance of making a deal with the commies over ag products. China has already diversified its food imports now boosting purchases from Brazil and other ag-rich nations. China also will be stockpiling food stuffs depending on shelf life. Dirtbag dictator Xi needs to keep those Chinese bellies plump.
US investors and traders bow to the power of the central bankers. The Fed, BOJ, ECB, PBOC and other global central bankers are modern day money God's. Traders and investors kneel at the central banker altar each day over the last near-11 years. Market participants worship the doves flying above the trading floors dropping cash from the sky. The world is awash in liquidity and prices of all assets including stocks, bonds, art, collectibles, antique cars, vineyards, real estate and anything else you can think of are in bubble territories. The Keynesian money-printing results in the longest stock market rally and economic expansion in US history. Parties are fun until the booze runs out.
S&P futures are up +29 late Friday. Of course they are considering the Friday joy. This number is meaningless; you have to check the futures out at 6 PM EST Sunday evening to see what the skinny is and set up for next week. The low put/calls signal that something wicked this way comes. The top may occur any day, any minute, any hour ahead. Listen for any potential bad news this weekend especially in that 4 PM EST to 6 PM EST time frame on Sunday afternoon East Coast time.
The SPX is set to fall from 40 to 150 points, or more, after it peaks at any time any minute any day forward. The SPX daily and 2-hour charts can provide insight as to the exact timing of the top. A catalyst, such as a negative news bite this weekend, could light the low-put/call-fuse and begin the selloff. The stock market either topped-out Friday, or will top out on Monday, or by mid-week. Since the CPCE already printed a low number, the top is likely in sooner rather than later, like right now.
Monday may be a historic stock market day. As Betty Davis said many decades ago in All About Eve, "Fasten your seat belts. It's going to be a bumpy night (ride)." The big October crash did not occur. How interesting it would be for the stock market to begin crashing now when everyone is convinced that the all-clear has sounded and November begins. Black Monday, anyone? A news bite would likely have to occur as a catalyst. 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 Monday Morning, 11/4/19, at 4:13 AM EST: Overnight, US Commerce Secretary Wilbur Ross is opining optimistically about a US-China trade deal. S&P futures pop +12 as traders on the East Coast rise from slumber. The phase one trade deal looks like it is on tap for this month. VIX 12.63. The S&P 500 is set to print more new all-time record highs.
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