$SPX broke down this week as a confluence of potentially bad international news out of Greece, Puerto Rico, and China combined to strike fear into what had been long-complacent U.S. traders.
$SPX has now rallied back above 2070, returning to the previous trading range. From a more bearish viewpoint, though, the 20-day moving average is now trending downward, and there is a series of lower highs on the chart. That is bearish.
The stock market, as measured by the Standard & Poors 500 Index ($SPX) continues to trade in a fairly tight range, which is beginning to frustrate just about everyone. There is support at 2070, and the 2130-2135 area is now strong resistance. As a result, the $SPX chart is neutral.
Equity-only put-call ratios are about as noncommital as I can remember. Both are drifting sideways, meaning they're not really on a strong trend of any kind.
The sale of a naked put is often a very attractive strategy – especially if the put is “overpriced” (although “overpriced can be a very subjective term). In this article, we’re going to look at some of the background on put writing, and then show a systematic way to select which puts are best to write. We’ll start out with equity put options and then talk about selling index put options later on.
The Standard & Poors 500 Index ($SPX) had a few bearish days, but managed to successfully test support near 2070 twice this month. $SPX remains within the trading range of 2070 - 2135.
The equity-only put-call ratios continue to generally trend sideways, which makes them neutral. Even though the standard ratio is trending slightly higher and the weighted ratio is trending slightly lower, neither is on a valid signal at this time.
Despite some indications this week that the market might break down, it did not do so. In fact, the Standard & Poors 500 Index ($SPX) held near the previous support level of 2070, thereby strengthening that level as market support. On the upside, there is resistance at the old highs of 2135, so $SPX remains locked in the 2070-2135 trading range.
Not much has changed in the market in the last week, with one possible exception: was yesterday's breakdown below near-term support significant, or was it just another meandering that will have no follow-through? Based on recent history, it's probably the latter (no follow-through). More than likely, we are still in a trading range for $SPX, between support at 2070 and resistance at 2135.
$SPX remains stalled just below the all-time highs, which are at 2135. The support at 2070 (the lows of March and April) remains in place.
Equity-only put-call ratios are technically still on sell signals. But as you can see from Figures 2 and 3, they have been drifting sideways for a couple of weeks.
Market breadth oscillators gave sell signals prior to Tuesday's market decline. They remain on those sell signals, despite the broad market's attempt to recover.
Everything is grinding to a halt in this market, and that is probably a sign that an explosive move lies in the not-too-distant future. $SPX has support at the old highs (2120). If that should fail, there should be a good support level at 2070.
Equity-only put-call ratios remain on sell signals, according to the computer programs we use to analyze these charts. However, if one looks at Figures 2 and 3, it is obvious that these ratios have just been trending sideways for the past few days.
The broad stock market has continued to frustrate both bulls and bears by remaining within a trading range for quite some time. However, today, $SPX closed at a new all-time high and thus is on the verge of an upside breakout. While this produced much glee on CNBC, there could be problems once again if this breakout is not confirmed.
The simplest confirmation would be another $SPX close at new all-time highs, and this time above the all-time intraday high at 2125.92.
The stock market weakened considerably this week, and many of the indicators are now following suit with sell signals. But $SPX price action continues to frustrate both bulls and bears, as it refuses to trend higher or lower.
So now for $SPX, there is support at 2067 - 2072 (the April and May lows), with resistance above at 2125 (the all-time highs). Equity-only put-call ratios have deteriorated badly this week. Both ratios have rolled over to sell signals.
