CPCE Put/Call Ratio and SPX Daily Charts; Rampant Panic and Fear

The US stock market is news-driven over the last month; craziness. Jobs reports, inflation reports, the potential railroad strike, Fed comments, Ukraine War, and FedEx professing global doom and gloom create the downward slide in stocks. Then General Electric joins the FDX gloom, Dictator Putin threatens nuclear war and the cherry on top is Fed Chairman Powell, in a hawk costume, laying an egg on hump day. Other than all that, things are going swimmingly. The list of negative news is ongoing and it is hard to remember a prior time with such a string of negativity.

The gloomy sentiment feeds into today with currency trouble as the UK makes adjustments. The US dollar moves higher above 112. There is a universal consensus that stocks will continue tumbling lower and lower and chances are slim to none that a recovery will occur, and Slim just left town.

You know what happens when sentiment is on one side of the boat? These are special times, however, and markets can crash from oversold positions, but following the standard playbook, stocks should recover.

Use utes as your crash guide. If UTIL loses 976-980 today, a stock market crash is likely. If UTIL can hold the line at 976-980 today, stocks should find their footing in the days ahead. It is important that UTIL does not close below 976 today.

The CPCE put/call ratio is up to 0.83 verifying the rampant fear and panic. The tension is so thick you can cut it with a knife. People are fearful. That is when you typically want to buy stocks and go long. Run into the burning building while everyone else is running away. Conversely, when everyone is partying like its 1999 and complacent, that is the time to short the stock market. A recovery rally should be at hand as the bearish sentiment is off the charts negative.

The SPX chart shows the chart patterns over the last few months. A cup and handle (C&H) was satisfied but that morphed into a head and shoulders (H&S) and then price comes back up only to bump its head on the H&S neckline resistance and collapse bigtime. The SPX tumbles into the falling wedge pattern which is bullish.

The three purple lines of support are; 3720-sh, 3666, and 3637 the kiss of death, so they can be used as a gauge for any further weakness. If price falls through the tweezer bottom in June, it is light's out. Confirm that UTIL has lost 980 and put on your crash helmets. If stocks collapse, but UTIL does not lose 980, the stock market will probably recover. 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 8:06 AM EST: S&P futures are down 45 points about 90 minutes before the opening bell. VIX 28.76. Futures were down about -55 an hour ago with the VIX above 29.

Note Added 8:58 AM EST: S&P futures -52. VIX 28.91. The bears are in their glory days. There he goes; the last remaining bull just packed his bags and left town.

Note Added Saturday Morning, 9/24/22: The beatings will continue until moral improves! You can see the drama played out with the utilities yesterday. UTIL 976 failed ushering in the flush of US stocks. Major indexes tank -3% and more but pare losses to about -2% and more at the closing bell. UTIL 976.20 is the bull/bear line in the sand and price ends the week above at 978.52. This is a big deal for the bulls since it provides hope for a recovery rally. If UTIL would have closed sub 976, you may be looking at a Black Monday or Black Tuesday. This may still happen so monitor UTIL closely; it is a trap-door for the stock market. The bulls managed to pull stocks higher late-day and re-latch the trap-door but it is only holding, barely. The negativity is off the charts. Boom. The CPC put/call ratio spikes to 1.36 not seen since early 2020. Ditto the CPCE to 1.02 big numbers (chart above) that signify out of control fear and panic. Friday it would have been wise to cover some shorts and add longs. Sure the market can collapse from here if UTIL fails 976 again, but the extreme multi-year bearish sentiment forecasts that a rally is at hand. Are you ready for a 1,000-point up day on the Dow early next week? Okay, well, are you ready for a 2,000-point up day on the Dow early next week?

Note Added Wednesday Morning, 10/5/22, at 8:55 AM EST: The US stock market stages the biggest 2-day rally in 2-1/2 years. The SPX jumps from 3584 on Friday, 9/30/22,  to 3792 yesterday, a gain of 208 big points, +5.8%. The Dow leaps from 28715 on Friday 9/30/22, to 30325 yesterday, a gain of 1610 points,  +5.6%. Of course it did.