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Regular readers will remember the CPC is a short-term, contrary indicator. It compares the action in call options<\/a> to the action in put options<\/a>. A reading above 1.20 shows extreme bearishness among speculators and can indicate a good time to buy stocks for the short term. A reading below 0.80 shows extreme bullishness and could indicate a good time to sell.<\/p>\n The CPC closed at 0.77 on Wednesday – as the S&P 500 closed at a new all-time high and just a hair below 3,000. This is a short-term warning sign.<\/p>\n This is the third time the CPC closed below 0.80 over the past month. The previous two occurrences led to quick pullbacks in the stock market within two days.<\/p>\n So, we’re due for another quick pullback between now and Monday.<\/p>\n The problem now, though, is any sort of quick, short-term pullback at this point is going to trigger a broad stock market sell signal from the Volatility Index<\/a>. VIX sell signals typically last anywhere from several days to several weeks.<\/p>\n And, that sort of action is likely to generate the sort of negative returns that usually occur during the third quarter of a year that starts off as hot as 2019 has been (like we covered in Monday’s Market Minute<\/em><\/a>).<\/p>\n So… like I said… the dominoes are all lined up. All we need is a catalyst.<\/p>\n That catalyst might be today’s jobs report, or it might be something that happens over the weekend. Who knows?<\/p>\n I suspect, though, stock prices will be lower a few weeks from now than where they are today.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n P.S. <\/strong>The questions for next Thursday’s live Q&A are pouring in. I’m impressed with how eager you all are to become traders… or simply to hone your trading skills.<\/p>\n In my career, I’ve been through a lot of booms and busts. And, it’s clear to me that we’re right on the cusp of the best trading environment since 2008. Anyone preparing now should do quite well.<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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