- The $ CPCE's 10-day SMA10 reached its extreme value at the bottom of ̣ (overly bullish market sentiment) in January and February 2020. A subsequent rapid and robust sell-off resulted in a significant reversal of the indicator tell.
- The S&P stock index's V-shaped lows coincide with peak peaks in $ CPCE.
- $ CPCE's 10-day SMA is located largely in the bearish zone (Is Bullish for speculative markets).
- In June, $ CPCE reached its peak while $ SPX peaked and went into trading in a "Range Limit" (for about a month). The ensuing rally produced a Buying Climax in early September accompanied by a spike in $ CPCE.
- The current rally for $ SPX has surpassed the September highs, at the same time that $ CPCE (10-day SMA) is making the lowest of the year. The upside momentum of the equity market seems to be slowing down.
Often the cost on a buy contract gets more expensive when the Put / Call ratio indicates the demand for Buy contracts increases as traders are willing to pay higher prices at these times. In addition, overall market momentum will also tend to slow down as buy options intensify.
Another indicator of market sentiment that can be compared to $ CPCE is the ‘CNN Fear & Greed’ index. It ranges from 0 to 100. If the index is above the 90 thresholds, it will be Bullish bias while if it is below 10 it will be bearish bias. Brothers can go to CNN and type "CNN Fear & Greed" to see recent history for this metric. During the previous peak breakout period, this indicator rose above 90. Currently, this indicator is also located at 82 - That is, extreme greed:
Of course, we won't know when or how the market will react to extreme sentiment indicators. However, from these indicators, we can tell that the bullish bias is maximized and that the current trade is very crowded. It's harder to profit when the crowd has grown too large and many people are doing the same speculative operations.
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