CPCE Put/Call Ratio Daily Chart; Significant Stock Market Top Remains At Hand; Panic and Fear Remains on a Milk Carton

The dip-buyers are unstoppable. Panic and fear remains on a milk carton (missing). The Federal Reserve and other global central bankers promise to print money forever so traders and investors expect stocks to go up forever. President Trump scared the market pulling back away from fiscal stimulus talks but in the next breath started pursuing stimulus deals that would provide $1,200 for individuals and another airline bailout. Comically, this is called capitalism. The conclusion that traders make is that Trump has stated he will provide a big stimulus if he wins reelection and so will Biden, so within the month the fiscal stimulus will be approved and on its way (which will take a month or so to distribute; hopefully the administration and government dolts kept detailed records of the prior payouts so they can easily repeat that procedure again).

The backdrop above is bull gravy. Central bankers that are running printing presses 24/7 providing monetary stimulus and the US set to provide more fiscal stimulus as soon as the election is over on 11/3/20 or even sooner if mini-deals occur. Stocks catapult higher and Outtasite on Wednesday, 9/7/20. The stock market is chopping sideways recently due to the elevated VIX remaining in the high 20's. This is very odd market behavior since the VIX should be far lower considering the elevated levels of stocks.

The Keybot the Quant algo is long and tracking VIX 27.18 as the bull-bear line in the sand. Bulls must push VIX below 27.18 to prove that stocks can rally. Bears will roll stocks over to the downside if the bulls cannot achieve lower volatility. Just think, as volatility rises, the intraday price moves and day to day moves will become massive making this week look like child's play. VIX is trading at 27.57 with the S&P futures up +22 so the bulls want to spend another day at Party Town.

Traders remain uber complacent not worried at all about any stock market pullback. This is why stocks are topping out now and will begin a significant pullback. A -5% or -10% drop from current levels is easily doable. If long, you better git while the gittin's is good, otherwise, if you hang around, you will get your head chopped off. A tradeable bottom will not appear in the stock market until the CPCE moves above or at least near 0.80; that is when you can begin nibbling and accumulating stocks on the long side. Use this time, as the selloff begins at some point in the days ahead and occurs this month, to refine your wish list of long stocks so you can get ready for the tradeable bottom when the panic and fear arrives. For now, moving forward in the near-term, it will be more fun partying with the bears. 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 9:13 AM EST: Look at that. The bulls jam vol lower, nope, check that. A wild flash crash and spike occurs in VIX down to 27.05 now back to 27.54. Watch out. Things are getting dicey. Flash spikes and recoveries in volatility are not what you want to see if long. You are walking down the street looking at all the pretty buildings and prosperity but when you seek out a beverage at the tavern building, you realize it is a Potemkin Village of fake facades. Stocks are in perfect position to retreat with the elevated NYHL, uber low put/call ratios and traders and investors all universally convinced that markets will rally. Sell the rips instead of buying the dips.

Note Added 10:18 AM EST: That VIX mini flash crash was at 9:01 AM EST from 27.58 to 24.88 in 1 minute then full recovery at 9:12 AM EST. Velly intalesting. The SPX is up 18 points, +0.5%, at 3438. VIX 27.36. Watch that 27.14-27.18 area; it is for all the marbles. The VIX 200-day MA is at 29.98, call it 30, which is a key short-term stock market signal. If the VIX moves above 30, the wheels will fall off the stock market bus.

Note Added 10:32 AM EST: SPX 3439. Bulls are high-fiving each other while drinking Fed wine, buying stocks without a care in the world. However, the VIX is at 27.34 and does not yet want to move lower. Pump It Up. The bulls shove the SPX to the 3443 palindrome and the VIX drops three pennies to 27.31. That wasn't much bang for the buck.

Note Added 10:50 AM EST: SPX 3441. The bulls are throwing confetti and partying with Friday on their Mind. VIX 27.36.