And, as you can see from the following chart, this indicator has been “spot-on” at signaling short-term reversals in the broad stock market…<\/p>\n
![\"\"](\"https:\/\/s3.amazonaws.com\/jc-stable\/ee-assets\/channels\/articles\/mm\/201905-mm\/20180513-MM-01.png\")
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We’ve had multiple CPC “sell signals” over the past few months – as indicated by the red arrows on the chart. In every case, the S&P 500 sold off within one or two days afterwards. Most of the pullbacks were shallow – ranging between about 20 and 50 S&P points.<\/p>\n
That is the nature of short-term signals. But they can still produce profitable trades for nimble traders.<\/p>\n
The most recent sell signal came in early May, just before the China trade war fears ignited last week.<\/p>\n
Buy signals have been much less frequent this year. That’s not a surprise. The CPC indicates potential reversals in the market. And over the past few months, there haven’t been any decline phases to reverse… until last week.<\/p>\n
The CPC closed at 1.28 on Thursday. That’s above the 1.20 level that indicates extreme pessimism. And, from a contrary perspective, that’s a buy signal.<\/p>\n
Given this condition – and given the remarkable track record of this short-term indicator – it shouldn’t be any surprise that the stock market reversed Friday’s opening losses and closed higher the day. Traders who were watching this indicator should have been looking to buy into Friday’s decline.<\/p>\n
The CPC is still at elevated levels – closing Friday at 1.24. That, plus the new Volatility Index (VIX) buy signal that triggered on Friday<\/a> , should lead to some bullish action in the stock market early this week.<\/p>\n Don’t get too comfortable on the long side, though. The stock market suffered significant technical damage last week. There’s a good chance the intermediate-term trend has shifted from bullish to bearish, and that stocks will be lower several months from now than where they are today.<\/p>\n For the very short term, though, the CPC indicator is bullish.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n P.S.<\/strong> When the S&P fell as much as 2.5% this week, how did you trade it?<\/p>\n At about 10:44 a.m. ET on Friday, I sent a trade recommendation to my Delta Report<\/em> subscribers (selling uncovered puts on SPY)… By 1:22 p.m., we were out of the trade for a quick 3% gain.<\/p>\n Pulling off those kinds of gains, over and over… while the market tumbles… It’s just what we do in the Delta Report<\/em>. And, for reasons I won’t get into here, I believe the best opportunities are yet to come<\/a>.<\/p>\n I’ll explain everything on May 22 at 8 p.m. ET<\/u>. Book your seat now. <\/a> <\/p>\n Today, a dedicated Market Minute<\/em> reader shares why Jeff is the first read of her morning…<\/p>\n Jeff, you are the very first email I open every morning for guidance… You are incredibly…not hype. Just a sensitive and realistic view… You are a pleasure in a world of excessive hype.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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