CPCE Put/Call Ratio Daily Chart; Record-Setting Multi-Year Low in CPCE Signals Rampant Complacency and Fearlessness and a Major Stock Market Top At Hand

Americans are an optimistic bunch. Too bad their sunny rainbow world is about to be hit with a dark storm. The CPCE put/call ratio indicates off the charts bullishness. Traders and investors are the most bullish than in any recent decades. The euphoria is over the moon and no one thinks the stock market will retreat in any meaningful way (another indication of why it will). The low put/call indicates a significant stock market top is at hand.

The 0.3-handle guarantees a stock market pullback. It is only a matter of when it tops out, now, or tomorrow or perhaps Thursday or Friday, at any rate, very soon. The new moon peaks on the weekend which will bring some bad market mojo to equities Friday through Monday.

There are only three other times the put/call has been this low over the last decade; early 2011, 2014, and June 2020 as the chart above shows. In 2011, the SPX fell 300 points from 1375 which was a -22% (bear market) shellacking. In 2014, the S&P 500 retreats from 2006 to 1819 a modest 187 point loss or -9% (just shy of the -10% correction level). Keystone mentions now and then at how May 2015 was the last legitimate top in the stock market; everything above is central banker largess that will be guaranteed to come out of the market over the coming years. It will not be surprising to see the SPX in the 1800-2200 range in 2021 and 2022.

In June, the SPX falls from 3232 to 2969, a 263 point collapse, or -8%. Thus, expect a bigger drop than June since the selling did not create panic or fear; probably on the order of a -10% to -25% pullback over the coming days and weeks into year-end. This period of time remains historic and unique with the put/calls remaining uber low and subdued for a few months. This verifies the rock-hard solid belief by international traders and investors that the Federal Reserve and other other global central bankers (the four central banker horsemen of the coming financial apocalypse are the Fed, BOJ (Japan), ECB (Europe) and PBOC (China) will always print money and save the stock markets forever. The several months of subdued put/calls hint that the stock market top may be substantive and long lasting once it rolls over.

The spike higher days ago in the CPCE creates a whiff of fear which led to the big rally yesterday, that fizzled. The CPCE needs to move above 0.80 and higher to create enough fear and panic to create a nice, safe tradeable bottom when you can go long. Until then, sell 'em off and bring on shorts.

If you are long the market and made big money, get yourself out, otherwise you will lose your shirt. If you are a young person and investing in stocks, like Timmy Tech, get yourself out on the long side and instead play a couple things short going forward, otherwise, Keystone is going to chop your head off in the coming days. Short all rallies going forward. As said several times over the last couple months, be on guard for a flash crash or overnight crash event; either is easily possible with this ongoing erratic price behavior. And the potential flash crash event may be one-way; if it occurs, it likely will not print the recovery spike. 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.