By Lawrence G. McMillan
This decline has been one of the swiftest on record, coming from a period of relative calm and even somewhat positive technical indicators. The selling that has taken place in the last two weeks can only be described as panic selling, for the most part.
$SPX declined sharply below its 20-day moving average (see feature article), and as such is quite oversold.
So far, there is support on $SPX at 1100 to 1120 -- the daily lows of this week.
By Lawrence G. MCMillan
It is almost unfathomable to think that, exactly a mere two weeks ago, $SPX was at 1345 and there were thoughts that an upside breakout was possible. Now, two weeks later, in a move that can only be described as panic, $SPX is at 1200 with no floor in sight. Oversold conditions have ballooned to near-historic levels in some cases, but as the last few trading days have shown, "oversold" does not mean "buy."
Theoretically, there is $SPX chart support in the 1180-1200 area from last November.
By Lawrence G. McMillan
Suddenly, the stock market started to develop "religion" about the U.S. debt situation, and sold off sharply this week.
In one sense, this is like any other "event" -- an FDA hearing or a potentially volatile earnings report: the underlying has trouble moving decisively in either direction until the event has passed.
By Lawrence G. McMillan
Thursday's breakout upside move in the stock market has solidified the indicators together into a bullish posture. The chart of $SPX held onto a bullish picture even though the selling in the past two weeks was heavy at times. The 20-day moving average has been rising all along, and the index never closed meaningfully below that average
Equity-only put-call ratios have remained bullish, as they have continued to decline from their high peaks of a month ago.
By Lawrence G. McMillan
The market had a powerful showing Tuesday with the Standard & Poor’s 500 Index rallying 1.6% for the day. Market indicators suggest a potential 100-point rise in the index over the next few months.
By Lawrence G. McMillan
Put-call ratios are excellent measures of the sentiment of the general option-trading community. When the sentiment is that "too many" people are buying puts or calls, it is worthwhile to pay attention, for the majority are normally wrong at major turning points, and their actions can be interpreted into a market trading signal.
By Lawrence G. McMillan
The market action this week has been quite bearish and, frankly, quite out of character in terms of the indicators, but it may also be a rather severe reaction to the overbought conditions that had built up.
The S&P 500 Index ($SPX) had strong upside momentum a week ago, but ran into resistance very near the April highs.
Equity-only put-call ratios are bullish and have remained bullish even during this week's decline.
In this video recorded on June 17th at The TradersExpo Dalls, Larry McMillan discusses the predictive power of the put-call ratio indicator and predicts the rally at the end of June 2011. Larry also talks about the rare CBOE equity only put-call ratio signal and the total put-call ratio and what they mean for the market.
Click to visit Moneyshow.com and watch the video now
