CPC Put/Call Ratio Daily Chart; Market Complacency at 3 Year Highs; Significant Stock Market Top At Hand

The watch for the near-term top continues. The first recent pullback, which turned into a mini-selloff was from SPX 3120. The SPX quickly bounced on happy trade talk news and central banker largess. The next top was at 3150-ish with a drop to 3070-ish, that looked like the start of the selloff but alas, Soybean Donny and Dictator Xi announced the trade deal and stocks rocket higher. That little touch of 1.20 above helped the bulls create some buoyancy in stocks. The SPX prints a new all-time record high at 3198.22 and new all-time closing high at 3192.52 on Tuesday, 12/17/19, yesterday.

As the stock market high occurs, the CPC put/call plunges depths not seen since 2016. The complacency, fearlessness and euphoria is rampant in the stock market signaling a significant top at hand. Even those that opine about the possibility of a little selloff occurring are quick to say "buy the dips." Traders that voice cautiousness to the media are buying stocks like madmen in the background. Everyone is bullish.

Investors believe that the Federal Reserve and other global central bankers will print money forever and send stocks higher for eternity.  The central banks are the goose that laid the golden eggs. However, we have reached a denouement for this one-decade obscene Keynesian financial experiment. Everyone is all-in. It's easy to see. Bears have capitulated. Anyone questioning the Fed's power is now broke or has finally cried "uncle" promising never to short a stock again as long as they live. We're there.

It's the holiday season and this week is the last full week of trading for 2019. It is fascinating that the put/calls chose now to go from rampant complacency to off-the-charts euphoric over-the-top complacency.

Timmy Trader says he is taking in client money like gangbusters and immediately pushing it into ETF's. He does not even care what ticker since everything will go up on central banker largess in early 2020. That is the universal consensus; just ask anyone at the big party on that side of the boat over there. The one guy is guzzling down Fed wine like its water.

Aunt Agatha, who shunned the market for years, took her life savings and bot AAPL and AMZN stock yesterday like the nice young man in the suit and tie suggested at the financial office next to the pizza joint. Uncle Frank, said he would no longer sit back and watch the stock market go up and listen to his friends brag, so he ran out yesterday pulling all his money from his bank accounts and he bot FB stock plus several ETF's. Frank and Agatha celebrate saying they will be rolling in money come springtime.

The low 0.63 tells you a serious stock market top is at hand. People are too complacent and fearless recklessly taking chances and investing in things they do not understand. If you are putting new money, to work, short the market. The holiday season creates some wacky pricing but the expectation is for stocks to fall like rocks going forward. The top may be now, or tomorrow, the next day, or a few more days ahead, but it is so close you can smell it.

Taking a look at the January-February 2018 collapse (after traders became too complacent), the SPX fell from 2880 to 2540, that was 340 points, or -11.8%, call it -12%, into a correction. Price bounced off the 200-day MA. Using this fractal for the pending collapse in the days and few weeks ahead, a drop from 3200 to the 200-day MA at 2948 would be a 252 point drop, or -8%. If the SPX fell the same point amount, 340 points, that would place price down at 2860, a 11% drop. If the SPX falls -12% like early 2018, that would target 2816. So three downside targets once the carnage would begin are 2948, 2860 and 2816 which are drops of -8%, -11% and -12%, respectively. For giggles, averaging the three is a target of 2875.

Make your preparations. Paraphrasing Betty Davis, "It's going to be a bumpy ride." Merry Christmas to all. 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.