Volatility

Weekly Stock Market Commentary 2/15/2019

By Lawrence G. McMillan

$SPX continued its phenomenal post-Christmas rally (which to date has registered over 400 points of gains), but has still not broken through resistance at 2820. Unless that happens, the next peak on the chart will still be a lower high, and the $SPX chart will still have a negative tilt to it.

Weekly Stock Market Commentary 2/8/2019

By Lawrence G. McMillan

The first signs of bearishness are beginning to creep into the superbly strong rally that has taken place since Christmas. $SPX rallied into the 2720-2740 area this week, which is now resistance and has now backed off. Now we have our first sell signal.

Weekly Stock Market Commentary 2/1/2019

By Lawrence G. McMillan

The stock market's new love affair with the Fed continued this week, and the market really took off after the FOMC meeting on Wednesday. $SPX has now broken out over minor resistance at 2675, having gained a whopping 15% since the market's low close on Christmas eve (a mere 26 trading days ago).

The most important resistance is at 2800-2820. There is support at 2620, and then 2350.

Some Thoughts on Volatility Derivatives (Preview)

By Lawrence G. McMillan

Last year (2018) was a very interesting year in a number of respects. One of those was the behavior of volatility and especially the behavior of volatility derivatives. Since one cannot trade $VIX but must instead trade one of the listed products – $VIX futures, Volatility ETN’s or ETF’s, or options on those instruments – there are some nuances involved. Since all of those instruments are based on $VIX futures1 , that is where we’ll concentrate this discussion.

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Weekly Stock Market Commentary 1/18/2019

By Lawrence G. McMillan

The oversold rally has carried farther than many had expected. This is not too surprising, for the market is attempting to fool as many people as it can. We have participated in this rally, in accordance with the buy signals from our various short-term indicators and those indicators are still on buy signals. We thus expect the short-term rally to continue.

Determining The Trend of Volatility (Preview)

By Lawrence G. McMillan

We often talk about how the stock market usually trends in the opposite direction from volatility ($VIX). But how do we really measure the trend of $VIX? Often, we use the 20-day moving average, but that is a very short-term moving average that changes trend easily. In a longer-term bull or bear market, we would not want to swing in and out of a “core” position when we are trying to stick with the trend.

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Weekly Stock Market Commentary 1/11/2019

By Lawrence G. McMillan

Stocks rallied very strongly this week, and the gains that have been registered since Christmas have been spectacular. This has caused most fundamental investors, and especially the headline- chasers, to become very bullish. Do not be lulled into their euphoria.

Weekly Stock Market Commentary 12/28/2018

By Lawrence G. McMillan

In falling as far as it has, $SPX broke below almost all of the support areas that had been in place. There is now support at 2350 -- last Monday's lows. There was also a bit of support in that area back in the spring of 2017, but that is probably rather meaningless; support that old is not too relevant to a market that has this much momentum and volatility.

Weekly Stock Market Commentary 12/14/2018

By Lawrence G. McMillan

The bears have a tight grasp on this market right now, which is a bit surprising since it is so late in the calendar year. Typically by this time, even in bear markets, there is something of a year- end rally.

New post-October lows were established this week when $SPX traded down to 2583 on Monday. That confirms that this is a bear market, in case you had any doubts.

Weekly Stock Market Commentary 12/7/2018

By Lawrence G. McMillan

The action in the stock market is getting more volatile, at least in realized terms (implied volatility has not kept pace). The bottom line is that resistance at 2800-2820 has been reinforced, and similarly, support at 2580-2620 has been reinforced as well. The $SPX chart is bearish, in our opinion, as long as $SPX remains below 2820.

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