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Weekly Stock Market Commentary 6/14/2019

By Lawrence G. McMillan

The strong oversold rally that abruptly began on June 1st is still in play. It is slowing down, but the bears have not been able to retake any of the rally's gains. There is resistance at 2940-2950, with support at 2720-2730.

Equity-only put-call ratios remain solidly on their recent buy signals. The TOTAL put-call ratio is on a buy signal, too.

Weekly Stock Market Commentary 6/7/2019

By Lawrence G. McMillan

On Monday of this week $SPX was near its lows at 3pm. But from there, there has been massive buying all week. However, the $SPX chart is still bearish, because there are lower highs and lower lows on its chart. Oversold rallies typically carry from their lows up to and slightly above the declining 20-day moving average. That's exactly what this rally has done so far (the 20-day MA is just below 2830).

Big SPX Moves

By Lawrence G. McMillan

Last fall, we published several studies in The Option Strategist Newsletter and summarized them here, as well as enacted several trades based on “big moves.” At the time, 20 of the 21 largest $SPX daily rallies had been reversed in a fairly short period of time afterwards (3 to 23 trading days). The only one that had not been reversed was the one coming out of the March 2009 bottom of the financial crisis. Then there were two – on December 26th, 2018, and January 4th, 2019 – that weren’t reversed either. The reason that these are usually reversed is that occur during volatile, bearish markets where rallies are fierce but short-lived. However, at the actual bottom (March 2009, December 2018) the rallies were real – not just oversold bounces.

Weekly Stock Market Commentary 5/31/2019

By Lawrence G. McMillan

Stocks broke down through 2800 this week, and that had been a major support area. The $SPX chart is negative in that it is trending lower, now with lower highs and lower lows. There is only minor support below here, essentially at 2660-2680.

Weekly Stock Market Commentary 5/24/2019

By Lawrence G. McMillan

The main thing to keep in mind is that $SPX has not broken down below support at 2800. It was tested -- more or less -- once again yesterday and has held so far. A close below 2800 would be very negative from the viewpoint of the $SPX chart.

Overheard, the major resistance on the $SPX chart is the double top at the all-time highs. More than one bear market has started from a similar pattern.

The Option Strategist Newsletter Results of Recommendations for 2018

By Lawrence G. McMillan

The following table is a summary of the results, by strategy, showing the number of positions recommended in that category; the number of wins and losses, the win percentage rate, the total profit or loss in that category, and the average return at annual rate (the average return, annualized using the average holding period). 

Weekly Stock Market Commentary 5/17/2019

By Lawrence G. McMillan

$SPX bounced off of strong support at 2800 on Tuesday, and then fell back from resistance at 2890-2900 on Thursday, so for now $SPX is in trading range between 2800 and 2900 (roughly). I don't expect that range to last long, and a breakout either way is probably going to gather momentum quickly.

Weekly Stock Market Commentary 5/3/2019

By Lawrence G. McMillan

The Fed announced that they weren't planning on cutting rates at this time. That was a "shock" to the media, but probably not so much to traders. In any case, $SPX sold off after that, causing some sell signals to be generated.

The First Sell Signals Appear

By Lawrence G. McMillan

Several of our indicators generated sell signals at yesterday’s close – mBB, weighted equity-only put-call ratio, and both breadth oscillators. Stocks had been grinding higher in the morning yesterday, then after the FOMC Meeting, the market sold off, triggering these new sell signals. It appears that the first correction since the brief one in early March could be at hand.

Weekly Stock Market Commentary 4/26/2019

By Lawrence G. McMillan

$SPX made a new all-time closing high this week. The $SPX chart is strong and bullish, although the internals as represented by some of the other indicators are not nearly as strong.

There is support at 2890 and 2870, with major support at 2800. It seems to me that a break of 2870 support would be a problem.

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