The speed with which $SPX fell -- 63 points in two days -- meant that it sliced right through support areas without stopping. There is support at 1560 -- this week's low on $SPX. Furthermore, there is important support below there, at 1540, from a series of lows back in March and April.
Equity-only put-call ratios have not given confirmed buy signals yet. They remain on sell signals.
With the stock market collapsing recently, option implied volatility spiked higher in a large number of markets. Of course, actual (historical) volatility has increased as well, but it is implied volatility that reflects more of the panic mood of the public, and thus is the one that can be used as a contrary indicator.
(Barron's) - Options can be great contrary indicators.
Puts and calls are very versatile. Strategically, they can be used for leveraged speculation by some, while providing protection, income, or both, to others. Their prices and volume also can produce information advantageous for an investor or trader, even if that person doesn't actually buy or sell options.
The initial selling on Wednesday afternoon was probably just some profit-taking by traders who'd bought heavily on Monday and Tuesday. But then the selling gathered momentum.
After the FOMC meeting announcement Wednesday, the stock market fell sharply. All those people who had bought earlier – on Monday and Tuesday – had apparently become profit-takers by late Wednesday. Even though $SPX probed slightly above 1650 in the last two days, this was not an upside breakout. In fact, it just pushed the upper resistance area slightly higher, but $SPX still remains within the general 1600-1650 trading range.
The stock market has found itself under increasing pressure again this week, and once again seems to have found support at 1600. It is also clear that 1650 is resistance and $SPX is trading wildly and with great volatility in between those two levels.
Equity-only put-call ratios have remained solidly on sell signals throughout. Even on days when the market has rallied, there has been considerable put buying.
Market breadth indicators are currently mixed.
The failure of the market to follow through Monday on Thursday and Friday’s strong gains resulted in a pretty nasty day on Tuesday. Breadth was terrible, volatility rose sharply, and $SPX retreated to the support near 1620. Overnight, S&P futures are up about 7 points, so it appears that the 1620-1650 range is containing prices for the near term. A breakout from there could generate some momentum in the direction of the breakout.
The pressure on the stock market increased again this week, driving the Standard & Poors 500 Index ($SPX) down through some support levels, and generally turning almost all of our indicators to sell signals.
The next support level for $SPX -- at 1600 -- is the extremely important one, and that held today. There is now resistance at 1625-1635.
Equity-only put-call ratios are strongly on sell signals. They are now trending upwards, which is bearish for the market.
Stocks sold off almost all day Wednesday. This did a lot of additional technical damage. Specifically, $SPX closed below the 1625-1635 support area and now that means the 1600 level is the next support. 1600 was a double top back in April, and when $SPX broke upward through there in early May, it set off the wild buying spree that carried the market straight upu to 1690. Thus it is quite important.
Since stocks started to stumble last week, volatility has increased and a number of indicators have begun to look more negative.
The chart of SPX is still bullish, though. This week's low was 1640, and that is the first support level. There is also support in the 1625-1635 area, as well as at the still-rising 20-day moving average (near 1635).
Equity-only put-call ratios have started to roll over to possible sell signals.
