By Lawrence G. McMillan
The three-day weekend was apparently long enough for the bulls to reload and come into the market strongly again yesterday. All of the major averages closed at new highs, and in most cases, 5-1/2 year highs. $SPX was among that group. $VIX and $VXO both traded at their lowest levels since April, 2007. The breadth oscillators expanded strongly, since breadth was very positive. They remain on buy signals, albeit in overbought territory.
By Lawrence G. McMillan
$SPX had been contained within a range of 1495 to 1515 for about two weeks. This week, though, the index has broken out to new highs, above that 1515 level. That is positive.
Technically, that 1495 to 1515 level should provide good support for any pullbacks. In fact, a close below 1495 would be negative, and would probably signal the onset of a more severe correction. Below there, support exists at 1460-1470, the area of the 2012 highs.
By Lawrence G. McMillan
Most professional traders tell novice investors not to chase earnings. I have felt that way throughout my trading career. However, I never actually did any statistical work, nor did I come across any papers of statistical work by others, that actually document this fact. That statistical work – or at least some of it – has now been done by us, and the results are presented in this article.
By Lawrence G. McMillan
Currently, option implied volatilities are near extreme lows, by many measures. We have seen that VIX got down to nearly 12. It has been below 10 in the past, though, so it is not at historically low levels. However, many stocks have options that have never been cheaper. For example, IBM’s composite implied volatility (VIX) has been hovering near 10 lately. It has never had cheaper options in the nearly 40 years that listed options have been traded on the stock.
By Lawrence G. McMillan
$SPX has bounced back and forth in the 1495 to 1515 range for nearly two weeks. A breakout in either direction would likely be enough to spur further momentum in the direction of the breakout.
Equity-only put-call ratios continue to meander sideways. As such, they are not particularly useful indicators right now.
Market breadth has been positive enough to keep the breadth oscillators on buy signals. They are also slightly overbought.
By Lawrence G. McMillan
The stock market, measured by almost any broad-based index, made it through the entire month of January in a completely bullish mode. Thus the bullish trend is intact. As for technical levels, $SPX might see some resistance at 1520. If an overbought correction does materialize, it should find support in the 1460-1470 area.
Equity-only put-call ratios have drifted into a tight, sideways range. As a result they are not trending, and thus are not giving much of a signal one way or the other.
By Lawrence G. McMillan
The broad stock market continues to advance almost every day. $SPX is now trading at prices last since in December, 2007. It is not far from the all-time highs of October 2007. Support exists at 1460-1470.
Equity-only put-call ratios are on sell signals. It is quite unusual to see these reliable intermediate-term indicators on sell signals, yet the market continues to rise.
By Lawrence G. McMillan
There are several ways to measure an overbought market, and we’ll review many of them in this article. It is common knowledge that overbought markets eventually sell off – sharply, in most cases. But how long can a market remain overbought before it actually begins to decline? As it turns out, an overbought market can exist for quite a while before succumbing. Thus, it is important to wait for the overbought condition to abate and for actual sell signals to occur, before one ventures in on the short side.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — After drifting sideways in a state of virtual somnambulation, the stock market finally broke out to the upside Thursday.
By Lawrence G. McMillan
After drifting sideways in a state of virtual somnambulation, the stock market finally broke out to the upside Thursday. Based solely on the chart breakout, everything looks rosy. However, there are some serious overbought conditions in place, which will eventually have to be dealt with.
As for the $SPX chart itself, the breakout over previous resistance at 1475 means that the 1475 level is now support. Below that, there is still support at at 1450 and 1430.
