By Lawrence G. McMillan
The strong rally in the Standard & Poor’s 500 Index that has taken place in the last week is certainly noteworthy. The index is up from roughly 1070 to 1220 in six trading days. That is a pace that is almost unheard of.
By Lawrence G. McMillan
Sunday's overnight rally turned into a full-blown "melt up" by midday on Monday, as traders were literally in a panic to buy stocks. It was a "90% up day" nearly all day long. Very late in the day, the market started to decline, but then a whole new buying explosion occurred, driving prices to new highs for the day, and closing right on those highs. In the end it was a "90% up day" in terms of NYSE-based data and a "90% up volume day" in terms of "stocks only" data, just barely missing a full-blown 90% up day.
By Lawrence G. McMillan
These oversold rallies are unbelievably strong – especially this one, which was preceded by three of four days in the “90% down day” category. Yesterday afternoon’s 45-point $SPX rally in 45 points was perhaps unprecedented, and now another 20 points have been tacked on today, as another afternoon rally is gathering strength. Makes one wonder who was selling previously, and where are they now?
By Lawrence G. McMillan
...The equity-only put-call ratios have rolled over to sell signals, and that is a major technical factor, in my opinion. Technically, the standard ratio was not yet a “confirmed” sell signal, but it likely will be after today’s numbers are posted.
By Lawrence G. McMillan
The main feature of the current market is high volatility. Even though $SPX has been contained within essentially an 80- to 100-point trading range (bound by 1100-1120 on the downside to 1200-1220 on the upside) for weeks now, the speed with which it runs from one end of the range to the other has kept volatility measures high.
Equity-only put-call ratios are beginning to look more negative. The weighted equity-only has rolled over to a sell signal. The QQQ ratio has already rolled over to a sell signal, too.
By Lawrence G. McMillan
The stock market, as measured by the Standard & Poor’s 500 Index, remains volatile within a trading range. It reverses direction at will, and hasn’t been able to sustain moves for weeks now. Today’s trading is typical of that description. In fact, it’s been volatile in this manner all week.
By Lawrence G. McMillan
...The two back-to-back “90% down days” of last week need to be worked off, and that seems to be happening at the current time. So far, over the last six weeks or so, severe oversold or overbought readings aren’t just “worked off” but rather are jumped on so hard that they completely reverse to the opposite condition. Coming into today, the breadth oscillators are modestly oversold, and $VIX was in the midst of forming a spike peak.
By Lawrence G. McMillan
The market has quickly become extremely oversold again, and thus short-lived rallies are possible. In the bigger picture, bears see a break of the recent uptrend dating back to early August. Bulls see a successful retest of the lows. A move to new lows below 1100 will prove the bears right; otherwise, the bulls still have a chance to rescue the market.
The equity-only put-call ratios have been on buy signals for a few weeks but they are beginning to weaken now.
By Lawrence G. McMillan
A week ago Monday, the stock market survived a bout of heavy selling with a late-day reversal that eventually carried the Standard & Poor’s 500 Index from an intraday low just below 1,140 to recent highs near 1220.
Those numbers roughly identify the trading range that has contained the S&P 500 SPX -2.56% since the early August lows. Volatility has remained high, so the index has been able to traverse the range swiftly and often. The large, swift moves tend to reflect the nervousness of both bullish and bearish traders.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — The broad stock market, as measured by the Standard & Poor’s 500 Index is trading within a large, volatile range that should have significance when a breakout finally occurs. There is a generally bullish bias to the technical indicators right now, but that certainly doesn’t mean that a clear path has been laid out for a new bull market. We have not changed our outlook that another severe decline could easily loom on the horizon.
