CPC and CPCE Put/Call Ratios Daily Charts; Rampant Complacency, Lack of Fear and Euphoric Bullishness Sets Up Epic Stock Market Top

The stock market is in a melt-up celebrating ECB President Lagarde's promise for more easy money tomorrow morning and Federal Reserve President Powell's pledge for more juicy goodies next Wednesday, 6/10/20. In fact, Powell proclaims across the land that he has "limitless" tools available to keep the stock market elevated. Madame Lagarde will swim out to the stage tomorrow, in Olympic form, and synchronize the new bond-buying program with the global central banker cabal. Lagarde already promised a big bazooka but the natives have become reckless so she had better show up displaying two big bazooka's in the morning (lunchtime European time).

Comically, the SPX will be up 200 points before it falls 200 points. Keystone wanted to show the two charts above because you must realize that over the coming few days, you will witness the start of something so wild that it will be talked about for decades to come. The stock market is printing an epic top right now and the only question is how far she will fall.

No one sees it coming at all. The SPX PE is at 22 and traders are sloughing that off like warmed-over meatloaf. There is only one belief and that became apparent on the floor of the Big Board today. A shrine was erected in Honor of the Federal Reserve. Traders kneel in front of a cardboard cutout of Chairman Powell. They Praise the Glory of the Fed and its ability to make stock market prices rise forever. The Fed is the new modern-day money and market God. Praise Be to Lord Powell.

Since the stock market will never go down again, as every man, woman and child believes, investors are getting out of hand in their portfolio positions. Fred Fafooshnik, who fancies himself as Jesse Livermore incarnate, decided to place his entire life savings in the quintuple 5x ETF that is long the S&P 500. Fast Freddy, that's what the gal's call him around town, then bot AMZN stock with his paycheck. Even Pastor Brown, that lives in the run-down rectory across from the church at the end of town, took last Sunday's collection plate and bot AAPL stock. He told the altar boys that the Lord would think it is alright because it is guaranteed to triple in only a year or two.

Late Monday, the stock market received a strong short-covering rally and that feel continued today. One by one, those short the market could no long endure the pain. Were you one of them? Traders will hold on until they cannot take it anymore. A lot of folks covered shorts today and officially gave up on stocks ever going down again. This is evidenced by the low put/call ratios now at record lows. Complacency and fearlessness is rampant in the markets. Investors are euphorically bullish expecting the rally party to never end. They are about to get hit in the face with a 2x4 (two-by-four; a stick of lumber). 

The near-term top has been very elusive in recent days as the SPX price has rocketed higher. The bulls have the central bankers in their camp. The full moon peaks for the month on Friday at 3:12 PM EST. Stocks are usually bullish through the full moon. Stocks are usually bullish to begin a month, like now. Stocks are bullish 80% of the time the couple days going into the Fed meetings which is next Wednesday. The bulls are laughing since everything is going their way and they tell the bears to lick their shoes. Sally, the platinum blonde receptionist in the lobby, yells out that she bot NFLX stock with her entire paycheck last week.The cab driver, shoeshine boy and doorman all say that "Stocks will never go down again." 

Of course that is when they do. The CPC is down to 0.40 not seen since 2014. That means traders are the most bullish and confident in six years. The CPC is down to 0.69 not seen since the Jan-Feb stock market top this year. People are throwing money at the stock market right now. A chimp is picking stocks for one trader. Another is throwing darts at the stock pages. It's all fun and games since everything goes up on central banker liquidity forever (moral hazard).

The bulls are trying to keep stocks elevated into the Fed meeting next Wednesday but one step at a time. Lagarde is in the limelight tomorrow displaying her bazooka's. This puppy can collapse at anytime. Same dealio as the last hundo and a half points; the top is set to occur at any hour any time any day forward. It is likely going to be historic. Ditch your longs and bet heavy on the short side; big blocks of shorts. Go for it. The NYMO is above 92 signaling a near-term top in stocks. You do not get these opportunities often. A top is in here somewhere and when it drops it may be nasty and fast.

The SPX 2-hour chart is in negative divergence so it has topped out. The bulls have managed to goose the RSI and MACD higher on the SPX daily chart which wants to now add 1 to 3 days of buoyancy. The bulls are trying to keep the turd afloat into the Fed decision next Wednesday and hope that more easy money will take stocks even higher. However, considering the drama the last couple weeks, when she starts down, it may be super fast, even a flash crash. Plan accordingly.

The SPX weekly chart continues showing long and strong indicators so this will have to be monitored going forward. Bulls may try to keep stocks elevated which may provide time for the weekly chart to set up negatively and take it all lower for an extended time, or, stocks tumble hard and fast say for a week or two, but then recover again to the current highs, when the weekly will be neggie d, then stocks roll over again for multiple weeks.

Keybot the Quant, Keystone's proprietary trading algorithm, remains long. Keybot takes the smoothest path possible through the trading year and is not programmed to catch tops and bottoms. Stocks should roll over at anytime forward due to the technicals explained in recent days and then Keybot flipping short would act as a confirmation of the downside.

Get ready. Stocks will top out at anytime ahead and the fall is going to be large. Take your pick; 100 S&P points,? 200? 300? Maybe more to the downside? 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.