The complacency is front and center again as evidenced by the VIX falling to 12.81. The SPX closed down a couple points as well yesterday so one of them is wrong. The put/call ratio's are at lows again verifying the market complacency. Traders are firmly convinced that the Fed will always supply the easy money as well as the BOJ and other central bankers. The yen weakens this morning with the dollar/yen jumping from 96 to 98 creating global bullishness in equities. The SPX daily chart provided this morning shows the tight bands that require a strong move either up or down for equities during the coming few days. The move may be from 20 to 60 SPX handles.
The complacency in the CPC and CPCE charts show that even if the tight bands on the SPX squeeze out an up move, the markets will likely top as that thrust higher occurs and then roll over to the downside. Look at the April fractal highlighted this morning on the SPX daily chart. Price leaped higher from the tight band squeeze which created the April top and failure. Either this behavior will repeat, where the SPX will jump into the 1720's and then quickly fail, or, markets will simply sell off from here. As difficult as it is for a short-seller to witness an upward thrust in the SPX due to the tight bands, the put/calls say any upward thrust will be relatively short-lived like April. Equities are not attractive to buy from a long perspective until the CPC moves above 1.2+ and the CPCE moves above 0.75. Until then, short protection is needed and longs should be avoided with the exception of looking for opportunities in miners, shippers, coffee and individual stocks in niche markets. 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.
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