CPC Put/Call Ratio and SPX S&P 500 Monthly Charts; Significant Stock Market Top At Hand

Look at all the lollipops. The CPC and CPCE CBOE put/call ratios remain at uber lows; record multi-year lows. This signals rampant complacency and fearlessness in the stock market and a significant top at hand. Everyday is a par-tay with traders and investors drinking Fed booze, telling each other how smart they are, buying stocks with reckless abandon and ignoring due diligence. Young investors, with time on their hands due to the coronavirus (COVID-19) pandemic, have jumped into the stock market thinking this is their path to great riches. They will lose their shirts. The robots are simply following the trend that marches higher and higher, until it doesn't.

The low put/calls verify the euphoric bullishness in the stock market. The taxi cab driver, who quit and is now an Uber driver, took his entire paycheck last week and bot AAPL stock. The shoeshine boy is bragging that he owns AMZN stock and plans to buy more. Aunt Betty, that was always known for her frugality, threw caution to the wind and gave her entire life savings to the broker in town, who has the office between the thrift store and the laundromat, and told him to place it all in tech and chip stocks. Frank Chisler, the broker, suggested that Betty diversify, and she agreed, so she bot some TSLA stock, too. It's the silly season.

The red circles show the significant stock market tops over the last decade. The green circles show the significant stock market bottoms when panic and fear is rampant. You want to buy when people are screaming bloody murder running for their lives and sell when people are partying like its 1999. 

The May 2015 top was the last legitimate top in the stock market. The stock market was toast with 1400 in its sights. That is why the Federal Reserve rode in on its pale green steed to save the day creating that Tweezer Bottom in early 2016. The intervention into global markets by the four central banker horsemen of the financial apocalypse, the Fed (US), BOJ (Japan), ECB (Europe) and PBOC (China), over the last decade-plus has created dislocations and oddities in the stock market, especially since the obscene 2016 bottom. These biblical anti-Christ's have destroyed all price discovery in global financial markets.

The low put/calls called the top at the end of last year into early this year and voila, the February-March crash occurs; the fastest crash in stock market history. You can see the Tweezer Top formation on the SPX monthly above at the start of this year.

Comically, the stock market is above the February highs pumped by unprecedented Fed monetary stimulus and US government fiscal stimulus. Ditto the rest of the world. The planet is awash in liquidity. Money is laying all over the ground everywhere dropped from heaven, like manna, from the sacred and worshiped central bankers. Traders and investors pick up the money and buy stuff like stocks, bonds, real estate, vineyards, art, collectibles, antique cars, gold, diamonds, etc...; rich people stuff. All asset classes are pumped into bubbles. No one truly knows what anything is worth anymore due to the 11-plus-years of central banker intervention. In other words, the pricing is phony baloney and the day of reckoning always arrives.

The move higher from 1800 to over 3500 is fantasyland; it is the best stock market rally that global central banker money can buy. Do not be surprised if the S&P 500 is back at 1800 over the next year or two. That should scare the Hell out of you. If you invest money now, you will likely only have one-half of your capital remaining in a year or so.

That 1800-2200 range is easily doable. When the stock market is down there, and people are opining about their loss of their retirement funds and so forth, Keep in mind that one-half of America will be laughing at the wealthy class that lose money in their stock portfolios. There will be no pity shown on their part. One-half of Americans do not own a single share of stock; their response to the stock market falling will be 'good, f*#& them (the rich)'.

In that 1800-2200 range, folks will be praying it does not fall to 1400 but that will be a bridge that has to be crossed in a year or so. The multi-year record lows in the put/calls signal substantial trouble coming for the stock market. Plan accordingly. Do you think we are on the Eve of Destruction? Take a look around you, boy, its bound to scare you, boy. 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.