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A Realized Volatility Sell Signal (Preview)

By Lawrence G. McMillan

A couple of years ago, we put together some facts and came up with an “early warning" sell signal, based on historical volatility of $SPX.

A “New” Strategy – Just In Case The Market Collapses (Preview)

By Lawrence G. McMillan

As we have shown, there is a massive number of overbought put-call charts and just a general level of extreme speculation in the current market.  In late 2017 and 2019, conditions were similar and they persisted into February before the market collapsed.  The market is rarely so accommodating as to keep repeating itself, so while I definitely feel that a major correction could occur, I would expect our indicators to get ahead of that.  But just in case something comes out of the blue, this strategy is designed to generate large gains in a collapsing market, at only a small cost if that does not happen.

Thanksgiving Week Seasonality: 2020 Update (Preview)

By Lawrence G. McMillan

Thanksgiving sets off a number of seasonal patterns, although we combine several of them for one trade.  The three main seasonal patterns are:

1) post-Thanksgiving bullishness: buy the market at the close of the day before Thanksgiving and hold into mid-December.

The Heating Oil – Gasoline Spread: 2020 Update (Preview)

By Lawrence G. McMillan

We have been trading this seasonal spread annually every year since 1994, except for 1995. The spread has a good track record, but suffered its worst loss to date last year. All of the pertinent statistics are included below.

Put-Call Ratios in 2020: A Historic Year (Preview)

By Lawrence G. McMillan

We have continually been talking about how low the equity-only put-call ratios have been this year – first in January when they dropped to the lowest levels since levels since 2014, but then again in August when they dropped to the lowest levels in our database, which goes back to 2001.

The October Seasonal Trade - 2020 Update (Preview)

By Lawrence G. McMillan

One of our favorite seasonal trades – and one of the most rewarding – is the October Seasonal Trade. It will be coming up at the end of October. It calls for buying “the market” on October 27th and selling out your position on November 2nd . BUT...the trade is only taken if there has been a 3.2% or larger decline sometime during the month of October. So far, we don’t have that last criterion satisfied, but it’s still early in October.

How the stock market may react to a Contested Election (Preview)

By Lawrence G. McMillan

There has only been one contested election since listed options have been trading – the 2000 election between George W. Bush (43) and Al Gore. Election day was November 7th, 2000. The accompanying charts, courtesy of tradingview.com, show the pertinent time period. The three months August, September, and October “+” – as shown in the table at the beginning of this article – are noted in blue on the $SPX chart of 2000. There had been a good rally in August, but that had been completely reversed by mid-October. Then a late October rally brought $SPX back almost exactly to where it had been on July 31st – meaning that the three-month period was essentially a “wash.”

The Cumulative Advance-Decline Volume Line Buy Signal (Preview)

By Lawrence G. McMillan

This is a subject that we wrote about in the July 31st, 2020, issue. Cumulative Advance-Decline Volume Breadth (CVB) is determined by 1) calculating the daily difference between volume on advancing issues minus volume on declining issues, and then 2) keeping a running sum of that daily total. We pointed out that there have been a few times in the past where this CVB made a new all-time high while $SPX had yet to do so. Every time, $SPX followed along to a new high of its own.

$SPX in Presidential Election Years - 2020 Update (Preview)

By Lawrence G. McMillan

$SPX In Election Years

We have $SPX data going back to 1950, so it wasn’t too difficult to construct the following Table, which shows the performance of the market (as measured by $SPX) each election year, from the last trading day in July through the day prior to Election Day. It should be noted that the stock market was closed on Election Day until 1984 – a rare bit of trivia probably not known by most younger traders.

Aftershocks of a Bear Market on the Volatility Space (Preview)

By Lawrence G. McMillan

There are currently a number of factors affecting the CBOE’s Volatility Index ($VIX), most notably the upcoming Presidential Election and the fears of market volatility that a contested election might foist upon the stock market. But there is another element that is affecting $VIX, and it is not getting much press. Specifically, it is the after-effect of an initial bear market “shock” on $VIX.


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