By Lawrence G. McMillan
The S&P 500 Index ($SPX) pulled back only a little, but that was enough to alleviate some of the overbought conditions and to establish support at 1340.
Equity-only put-call ratios have begun to move sideways recently, but they remain on buy signals.
Market breadth was fairly negative from Feb 10th through Feb 15th. That was enough to alleviate the serious overbought condition that had existed in the breadth oscillators. Since then, breadth has improved again, and at this time, breadth is on a buy signal.
By Lawrence G. McMillan
In the last issue, we laid out a trading system for VXX and XIV, the most liquid short-term volatility ETN’s. VXX uses the two front-month $VIX futures contract to create an instrument that tracks near-term volatility directly, while XIV is the inverse of the same thing.
We had left a few questions open at the end of that previous article, and we aim to answer those in today’s issue. Moreover, some reader questions have been asked as well, and we will address those too, since they are important to the overall concept.
By Lawrence G. McMillan
Was the two-day selloff on Tuesday and Wednesday of this week enough to refuel the bulls? It may have been.
$SPX closed at a new high for this post-October rally, although it has not yet exceeded the 2011 high at 1370. With today's rally there is clearly strong support at 1340. which is at 1290.
Equity-only put-call ratios are technically on buy signals. However, they edged higher over the last two days.
By Lawrence G. McMillan
The stock market refuses to back off. This is making TV commentators gleeful, but experienced traders are finding such one-sided action to be a bit dangerous.
By Lawrence G. McMillan
The CBOE’s Futures Exchange introduced futures on the volatility index, $VIX, in 2004 and began trading options on $VIX in 2006. The Barclay’s Volatility ETN (VXX) has been around since January 31, 2009. VXX owns $VIX futures and rolls them in a manner consistent with the formula for creating $VIX. Hence the two – $VIX futures and VXX are directly related. We have recently conducted a study, investigating a trading system for VXX, based on the differential in the prices of the two front-month $VIX futures.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — As much as I like the intermediate-term picture, where nearly all of our indicators remain bullish, the overbought condition that has been created is reaching the stage where – if it’s not alleviated soon – it could result in a gut-wrenching drop that can wreak havoc on portfolios and, more importantly, on psyches.
By Lawrence G. McMillan
The market continues to rise, mostly in a very slow-motion fashion. Meanwhile, overbought conditions are building. $SPX has bumped up against the 1330 level for three days in six, without being able to break through. I would not expect any correction to violate that bullish trend line, but if it should happen, it would be a major negative factor.
Equity-only put-call ratios remain split. The standard ratio remains on the sell signal that was generated last week. But the weighted ratio remains on a buy signal.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — The bulls have been completely in charge. While there may be some short-term victories ahead for the bears, it appears the bulls are not finished yet.
By Lawrence G. McMillan
Source: CBOE Futures Exchange -- The CBOE Volatility Index (VIX) is accelerating in its downtrend. This is likely bullish for stocks and reflective of the strong stock market rally in the S&P 500 Index (SPX) that has taken place so far this year. Not only has the market rallied, it has done so in a very straight-line fashion with small daily ranges.
By Lawrence G. McMillan
There have only been four down days in January, and as a result the market is very overbought. The intermediate-term indicators are mostly still positive at this time, although there is one glaring exception -- a new sell signal (just registered today) from the standard equity-only put-call ratio.
Other intermediate-term indicators remain positive, though. For example, $SPX is still clearly in an uptrend. However, if the 1260 level were breached, that would be much more bearish.
