There were seemingly two stock markets yesterday. By that I mean that the big-cap stocks that have led this rally continued to do their thing, driving $SPX and the other major indices to new all-time highs. But there is a lurking problem that is perhaps coming to light: breadth was negative yesterday! I can’t recall $SPX being up 8 points, yet both “stocks only” and NYSE-based breadth being negative, but that’s what happened yesterday.
By Lawrence G. McMillan
Thankfully, the Standard and Poors 500 Index ($SPX) has finally closed at a new high, exceeding the market from October, 2007. Now that that's out of the way, perhaps we can go back to trading. Thursday's action was an upside breakout, and above that there is no resistance, per se, since prices have never traded that high. However, traders are often wont to sell at round numbers, so 1600 on $SPX may represent a resistance level.
By Lawrence G. McMillan
It always seems that the first volatility explosion sends a warning shot across the bow. That appears to be the case now.
Tuesday's low for $SPX was at 1538. That is now a support area. Below that, there is support at 1530. A violation of that level would likely signal the onset of a deeper market correction.
Meanwhile, equity-only put-call ratios may continue to be befuddled by the hedging activity of put buying.
By Lawrence G. McMillan
The term "volatility skew" refers to the situation where individual options on a particular entity have different implied volatilities that form a pattern. The pattern usually takes one of two forms: either the higher strikes have the higher implied volatilities (a forward or positive skew) or the lower strikes have the higher implied volatilities (a reverse or negative skew).
By Lawrence G. McMillan
I would expect $SPX to finally make a new all-time high soon. $SPX has support near 1530, which is also where the rising 20-day moving average currently is.
Equity-only put-call ratios continue to be mixed, with heavy call volume chasing the rising market, but heavy put volume in the form of protective put purchases. These two are nearly canceling each other out.
Market breadth continues to remain overbought and on buy signals.
By Lawrence G. McMillan
If there wasn’t such incessant media coverage today, one might have a somewhat different opinion of what’s happening in the current market. I say this with some degree of experience, having seen the early 1973 market firsthand.
The stock market continues to grind higher as the Dow Jones Industrial Average ($DJX) continues to make new all time highs. The S&P 500 ($SPX) is approximately 5 points away from accomplishing the same historic feat.
By Lawrence G. McMillan
So, that’s what passes for a “down day” nowadays? S&P futures were down for most of the day, but only about 7 points at their worst. But, as has been the case most of the time recently, those losses were regained by the end of the day. In fact, the Dow ($DJX) recovered all its losses, as it continues to handily outperform $SPX. Overnight, prices tried to retreat again (modestly), but retail sales data was positive this morning, so now the S&P futures are trading slightly higher on Globex.
By Lawrence G. McMillan
With the Dow ($DJX) making new all-time highs, and the Standard & Poors 500 Index ($SPX) simultaneously making new post-2007 highs, it certainly seems that higher prices lie ahead.
Both of the equity-only put-call ratios are somewhat distorted. That is because of all the put buying that has been taking place as protection for stock portfolios. At the current time, they are moving lower and thus appear to be back on buy signals.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — With the Dow Jones Industrial Average making new all-time highs yesterday, and the Standard & Poor’s 500 Index simultaneously making new post-2007 highs, it certainly seems that higher prices lie ahead.
Despite this price momentum, not everything is as bullish as one might suspect. We’ll look at the various indicators in depth to see how they line up.
