By Lawrence G. McMillan
The bears have slowly been gaining strength over the past week. The easiest way to tell is that the Standard & Poor’s 500 Index has slowly been trending lower and lower. The accumulation of this selling has produced some oversold conditions, though.
By Lawrence G. McMillan
The Standard & Poor’s 500 Index fell to new relative lows this week, finally closing below the 1330 level and trading down to 1318 — which was just about the level of the longer-term bull market trend line, connecting the August 2010 and March 2011 lows. That “touch” of the longer-term trend line, plus some overbought conditions, combined to produce a sharp rally today.
But, the overall picture is a more bearish one, since there is a downtrend now in force on the S&P 500 SPX +0.88% chart.
By Lawrence G. McMillan
The stock market is shooting back and forth like a futures contract. In fact, the whole market seems to be tied quite directly to the price of oil, silver, gold, and the like. When the market is linked to an unusual “force” such as this, some additional caution is required. At least technical analysis doesn’t care why moves are being made, but rather is just concerned with the price movements themselves.
By Lawrence G. McMillan
The Standard & Poor’s 500 Index and virtually every other major index broke out to new post-2008 highs (and some to new all-time highs) in the past few weeks. But as is always the case, the euphoria and momentum of buying produced some extremely overbought conditions. Those need to be worked off before the market can move higher, and thus a correction is at hand.
By Lawrence G. McMillan
The market has finally broken out to the upside — sort of. The Standard & Poor’s 500 Index finally made a new 2011 high, at last joining the Dow Jones Industrial Average, Value Line, Nasdaq 100, DJ Transports, DJ Utilities, Nasdaq Composite, and the NYSE Index, among others. The Russell 2000 is not quite at a new high, but it’s close.
By Lawrence G. McMillan
It has been an interesting week. On Monday, we had what I like to call the “emperor has no clothes” selloff. Seriously, to whom is it news that the U.S. financial situation is a mess? Apparently, it was to some, as Standard & Poor’s placing of the U.S. debt on “credit watch” spurred massive selling. However, somewhere on the way to financial collapse, the bears ran out of gas. That day, the S&P 500 Index SPX +1.35% rallied to close above 1,300, putting in a bottom for the day at 1,295.
By Lawrence G. McMillan
The Standard & Poor’s 500 Index was not able to make new highs over the past week. In fact, selling set in and knocked the market down. However, there is still a general bullish overtone to the indicators, and so the bulls have certainly not capitulated yet. Ostensibly, the catalyst for this selling is the continuing, worsening situation in Japan. However, it is just as likely that the market had reached too much of an overbought condition, and that had to be worked off — which it has been, for the most part.
Many of the major indexes have already made new post-2008 highs. This includes the Dow Jones Industrial Averag, the Russell 2000 Index, and the Value Line Index. The latter two are actually making all-time highs, having exceeded their 2007 highs.
Most people are not aware of just how strong the small-cap stocks have been. What has not made a new high (yet) is the Standard and Poors 500 Index (SPX 1,335, -0.85, -0.06%) . However, with these other indexes doing so, and with breadth being very strong of late, we expect to see new highs on SPX soon.
Several new volatility products have recently entered the market or will soon be listed for trading. The most promising of these is the new set of contracts to be listed on the Chicago Board Options Exchange. Trading began on March 25 in Gold Volatility Index futures on the CBOE. Options on them will be listed on April 12. Many other new products will follow in due course.
