CPC CBOE Put/Call Ratio Daily Chart Signals Significant Stock Market Top At Hand

The SPX floats +0.6% higher to 3349.16 on Thursday, 8/6/20, ahead of the US Monthly Jobs Report. The HOD is 3351.03. Investors ponder if the jobs number this morning, Friday, 8/7/20, will be negative, or not. The bulls keep the stock market buoyant the last month on the Federal Reserve's easy money policies, the US governments fiscal candy, the daily hype on COVID-19 vaccine development, the weaker US dollar and the optimism-at-all-costs American mindset. Equities are pumped higher into the bright blue rainbow-lit sky.

The all-time record high in the S&P 500, which is the SPX ticker symbol, the United States stock market, is 3393.52, and all-time record closing high is 3386.15, both printing on 2/19/20, 170 calendar days ago. Thus, yesterday, the SPX was only 35 points from punching out a new all-time record closing high.

The Fed whiskey, ECB champagne, BOJ sake and PBOC rice wine is flowing like water on Wall Street. The siren song from the four central banker horseman of the financial Apocalypse fills the ears of traders with happy thoughts, and the easy money booze reinforces the positive vibe, so inebriated traders buy stocks with reckless abandon and without need or care for due diligence. Traders kneel and worship at the feet of moral hazard each day. What a glorious world it has become.

Miss Mary, who worked as a librarian at the community library in the basement of the municipal building for 31 years, could stand pat no longer. Mary is worried about having enough money for retirement but not anymore. She took her entire life savings and bot AAPL and AMZN stock. The financial manager in town, Ned Novice, who has an office between the laundromat and Goodwill thrift store, advised Mary to be more diversified so she also bot some TSLA stock.

Everyone has come to realize that stocks will go up forever and if they do pull back, the Fed and other central banks will always step-in and print money to save the day. Traders and investors are now Pavlov's dogs buying stocks when the opening bell rings using any available cash and regardless of whether the stock market is up or down that day. The central bankers are the market, and they have created a very sick world. The 11-year-plus Keynesian financial experiment that started in March 2009, to protect America's wealthy class that own large stock portfolios, is reaching its end game. This is the time of the experiment when a testtube explodes and gases begin enveloping the lab.

The stock market is at a wild crescendo and few realize it. This makes it all that much more fun to watch. The CPC put/call ratio drops to 0.61 at the lows from 6/8/20 that marked the exact top in the stock market for that pullback. The June selling should have developed into something larger but it was stick-saved by the ECB's non-action, which sends the euro higher, dollar lower, and commodities, gold, silver and stocks wildly higher. The weaker dollar maintains the current buoyancy in the stock market. Last week, the Fed promises more easy money for as far as the eye can see which further encourages the buying of hot tech and chip stocks.

The low CPC is at multi-year record lows, levels not seen since 2015 and 2016, and the May 2015 stock market top was a very significant top. Get out of the stock market on the long side and bring on shorts or let that dough simply sit in cash. There is a figure in a black robe carrying a scythe walking towards Wall Street. The negative divergence displaying on the SPX charts in the different time frames will conspire with the uber record-setting complacency and fearlessness and likely create a spectacular downside move in equities. Of course, happy news can extend the top for a day or two more, but she is on her last legs.

The CPC cannot venture much lower, it is at extremes now. Therefore, the 21-day MA will flatten which signals the stock market top as now. When the CPC begins jumping higher as the carnage on Wall Street begins, when CPC price moves above the 21-day, that will guarantee the moving average to travel higher and firmly set the stock market top in stone. Are you ready for the fun? The scythes, sickles and knives are sharpened and ready to go. The bulls are partying like its 1999 but the bears have them circled and the furry trouble-maker's begin salivating. S&P futures are down -19 steadily deteriorating over the last few hours with the jobs report dropping in 3 hours and the US stock market opening in 4 hours. VIX 23.98.

Stay alert for a potential epic market move a la a flash crash or Black Day (Black Friday, Black Monday, Black Tuesday, etc...) event. 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 8:40 AM EST: The jobs report is 1.763 million jobs added, so not a negative number, and in line with expectations. The unemployment rate moves lower from 11.1% to 10.2%. Private Payrolls are 1.462 million jobs added. The Labor Participation Rate is 61.4%. Average Hourly Earnings are +0.2% on month and +4.8% on year. Average workweek is 34.5 hours. The wage data is skewed with all this crazy covid stuff occurring, with Fed and government largess, but the +4.8% annual wage increase gets your attention. Whether it is temporary or not, it is a shocking sight to see. The dirty little secret the Federal Reserve will never tell you is that steady inflation cannot occur in the economy without wage inflation exceeding +4.0% annually and more specifically, above +4.5%. This is why, despite the 11 plus years of easy money, inflation remains on a milk carton. Wages could never move higher so inflation remains Godot. But look at that wage number. Keystone is clenching his chest and has to rest in an easy chair a few moments to catch his breath. That wage number will lead to higher inflation in the overall economy despite 20 million people out of work and a society dealing with a pandemic. It may be a stagflation outcome where inflation rises during the weeks and months ahead, but there are no job opportunities, unemployment remains high, and the economic growth rate begins to sputter and slow. Time will tell if it is a temporary rise in inflation (if it occurs) in the weeks ahead that then subsides again, or, if the long-awaited inflation due to central banker largess, is finally arriving.  S&P -9. VIX 23.24.