CPCE Put/Call Ratio Daily Chart; Uber Complacency Continues Signaling Significant Stock Market Top

The stock market party continues. Fed Chairman Powell played Santa Claus during Q4 pumping billions in liquidity into the financial system sending stocks to the moon rewarding the wealthy elite class that own large equity portfolios. Life is good, well, if you're rich that is. The Federal Reserve panicked on 9/17/19 when the overnight repo rate jumped five times above its expected level creating a liquidity squeeze. Powell then promised to print money like a madman and he succeeded in creating another grand central banker-induced stock market rally. The Fed and other global central bankers are modern-day money God's. They perform the bidding of the Wall Street investment banks. All traders and investors Kneel and Worship at the Fed's feet each day.

The CPCE put/call drops to another uber low continuing to verify the ongoing rampant market complacency and fearlessness where stock market tops occur. Everybody and his brother know the Fed and other global central bankers will print money forever so with the world awash in liquidity forever, there is no reason to ever worry about stocks going down again. Moral hazard. Even if stocks sell off, dip-buyers will anxiously jump in since the Fed, BOJ, ECB or PBOC, the four central banker horseman of the Apocalypse, will collude and guarantee ever-increasing stock prices.

The behavior with the put/calls above is as rare as hen's teeth (not seeing a significant market pull back due to the uber ongoing complacency). The SPX would have already retreated from 50 to 200 points if the Federal Reserve was not pumping liquidity into the financial system like a madman. Note that the CPCE has not indicated a tradeable bottom since early October. In December, when stocks hung in there and closed the year on an upbeat, the CPC put/call ratio tagged 1.20 by a whisker, which was enough of a tinge of fear to help that rally. However, as seen above, the CPCE has not been able to move above 0.80 to signal enough fear and panic and a tradeable bottom.

The Fed QE pump continues until 1/17/20 next Friday so traders and investors keep the stock market elevated with the easy money liquidity despite the rampant and excessive joy and euphoria. Obviously, the Power and Glory of the Fed and other central bankers, that act in collusion daily, is strong enough to beat back expected stock market negative forces, at least for a time.

There will be a recoil, however. Everyone is on one side of the boat, dancing and singing, drinking Fed wine, telling each other how smart they all are to be 100% invested in the stock market. Since the complacency has lingered and the day of reckoning pushed back by central banker easy money, some market participants opine about a selloff, therefore, a choppy pattern may develop. The S&P 500 is expected to drop from 50 to 200 points from current levels due to the complacency but this may take shape with fits and starts, a choppy, whipsaw pattern for a week or few then down strongly. The other potential outcome for the path lower is a drastic sharp crash-like drop in stocks occurring even a flash crash. The CPCE chart above says stocks need to sell off going forward. Investors and traders are off-the-charts complacent without any fear or worry that the stock market will ever move lower again. 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.