{"id":16506,"date":"2020-08-31T14:06:47","date_gmt":"2020-08-31T18:06:47","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=16506"},"modified":"2020-08-31T14:06:47","modified_gmt":"2020-08-31T18:06:47","slug":"its-not-different-this-time-2","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/its-not-different-this-time-2\/","title":{"rendered":"It\u2019s Not Different This Time"},"content":{"rendered":"

Mike’s note: <\/strong>Before we get started on this Monday’s Market Minute<\/em>, I wanted to quickly remind you about Jeff’s special presentation last week<\/a>, where he taught his 18-year-old son Carson how to use the same trading techniques Jeff’s been using for over 30 years.<\/p>\n

To see if Carson was able to double his money using options… and claim Jeff’s free option trade recommendation… just click here<\/a>. But don’t wait. It won’t be available for much longer…<\/p>\n

\n

One of my favorite indicators has been misfiring a lot lately.<\/p>\n

The Chicago Board Options Exchange (CBOE) put\/call ratio<\/strong><\/a> (CPC) is one of the most reliable technical indicators for generating buy and sell signals.<\/p>\n

Most times, when the CPC pops above 1.20 – indicating traders are buying far more put options<\/strong><\/a> than call options<\/strong><\/a> – the stock market hits at least a short-term bottom. And, most times when the CPC dips below 0.80 – meaning folks are buying far more calls than puts – the market hits a short-term high.<\/p>\n

The stock market rarely rewards the popular opinion. So, whenever the CPC reaches extreme levels, it’s often profitable to bet on a reversal in the other direction. Indeed, using the CPC as a contrary indicator has paid off quite well over the past two years.<\/p>\n

Over the past month, though… not so much. The CPC spent the entire month of August below 0.80.<\/p>\n

Take a look…<\/p>\n

\"\"<\/p>\n

This sort of condition should have created at least a short-term pullback in the stock market. But, it hasn’t happened. The market just keeps powering higher.<\/p>\n

As I said, it’s rare for the market to reward the popular opinion. But, that’s what’s happening.
Buying call options is paying off.<\/p>\n

This same sort of thing happened back in January 2018. Folks may recall that as another period when stock prices just kept pressing higher day after day.<\/p>\n

The market was melting up. And, traders were buying call options into that action.<\/p>\n

Here’s how the CPC looked back then…<\/p>\n

\"\"<\/p>\n

The cluster of arrows in January 2018 looks remarkably similar to the sort of action we’re seeing on the chart today. So, it might be useful to take a look at how the S&P 500 performed in February 2018 to get some clues as to what might happen in the weeks ahead.<\/p>\n

Look at this Friday’s chart of the S&P 500…<\/p>\n

\"\"<\/p>\n

The relentless move higher in January 2018 was followed by an even more powerful decline. The S&P 500 lost about 12% in less than two weeks. So, while the individual “sell signals” from the put\/call ratio didn’t pay off immediately, the cluster of sell signals warned of an impending strong decline.<\/p>\n

The stock market action today sure looks similar to the action back in January 2018. And, the cluster of sell signals from the CPC looks similar as well.<\/p>\n

None of the recent sell signals have paid off yet. That has lots of folks wondering if the CPC is no longer a useful indicator.<\/p>\n

Of course, many folks thought that back in January 2018 as well. It’s not different this time.<\/p>\n

Traders shouldn’t be too quick to dismiss the CPC. It may be a warning of something more dramatic than a simple, short-term decline.<\/p>\n

Best regards and good trading,<\/p>\n

<\/p>\n

Jeff Clark<\/p>\n

P.S. <\/strong>Last week, I held a live presentation with my 18-year-old son Carson<\/a> to see if he could double his money using the same trading techniques I’ve been using for decades.<\/p>\n

During the presentation, he asked me all about how I use charts and indicators to track the market to make the best trade recommendations for my readers.<\/p>\n

If you’d like to see my answers, and claim a free trade recommendation, just click here<\/a>.<\/p>\n

Reader Mailbag<\/strong><\/h2>\n

Do you think that the CPC indicator is still worth following, or do you think the market will move in an unexpected way?<\/p>\n

Write in your thoughts \u2013 and any questions you may have \u2013 to feedback@jeffclarktrader.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

One of my favorite indicators has been misfiring lately…<\/p>\n","protected":false},"author":40,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[7],"newsletter-type":[],"ticker":[],"class_list":["post-16506","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-jeff-clark"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/16506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/40"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=16506"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/16506\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=16506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=16506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=16506"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=16506"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=16506"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=16506"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=16506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}