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Weekly Commentary 11/4/2011

By Lawrence G. McMillan

When the dust has settled, this looks like little more than a pullback from a slightly overbought condition to test the breakout level (at 1220). To sum up the $SPX chart: there is still support at 1220, and as long as that holds, it's a bullish chart.      

Equity-only put-call ratios have remained on buy signals all week, despite the heavy selling earlier in the week.      

Also, the breadth oscillators are back on buy signals once again.

In focus: Bulls being tested

By Lawrence G. McMillan

Monday and Tuesday had all the earmarks of panic selling, but it has shaken the confidence that had been gathered throughout the strong October rally.

Weekly Commentary 10/28/2011

By Lawrence G. McMillan

Today’s move saw $SPX blow right through the resistance at 1260 and also through the 200-day  moving average at 1272. Those are both significant levels to have overcome.  The market may have to spend some time around the 200-day moving average, as it often does when it passes through that level, but the next higher targets of 1310 and then the yearly highs at 1350-1370 should be within range fairly soon.

Equity-only put-call ratios remain on buy signals.

Weekly Commentary 10/21/2011

By Lawrence G. McMillan

The stock market remains volatile within an ever-narrowing range. For ten days now, $SPX has traded within a range of 1190 to 1230. Clearly a breakout of that range should be significant.

Equity-only put-call ratios are a bit mixed. The weighted ratio rolled over to a buy signal about two weeks ago, but the standard ratio has continued to climb -- thereby remaining on a sell signal.

Breadth indicators continue to remain on buy signals, and they have reached varying degrees of overbought.

The stock market is at a crucial juncture

By Lawrence G. McMillan

MORRISTOWN, N.J. (MarketWatch) — The stock market, as measured by the Standard & Poor’s 500 Index, reached a very important point: the top of the trading range, near 1,220-1,230. The trip to get to this point has been an interesting one.

VIX October Futures settle at 33.15

The October VIX Futures settled at 33.15 this morning, down 57 cents from last month's settlement.  This is the third month in a row that the futures expired with a value above 30.  This hasn't occured since the 2008 crash.

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A VIX-ing Paradox

By Lawrence G. McMillan
Source: Barron's

Traders of volatility derivatives -- futures, options, or exchange-traded funds and notes -- often wonder why the VIX, or the Chicago Board Options Exchange Market Volatility Index, moves much more violently than do the derivative contracts that are based on it.

Weekly Commentary 10/14/2011

By Lawrence G. McMillan

The pace of the recent rally was such that the market is now short-term overbought. For all the movement, $SPX is still within the confines of a wide, volatile trading range -- which now extends from 1070 to 1230. A breakout above 1230 would be bullish, although there is more resistance at 1260.      

Equity-only put-call ratios aren't as clear as they sometimes are. The weighted ratio has moved back to a buy signal, but the standard ratio really hasn't.      

Strong Buy Signals Emerge - Already Overbought

By Lawrence G. McMillan

Sunday's overnight rally turned into a full-blown "melt up" by midday on Monday, as traders were literally in a panic to buy stocks.  It was a "90% up day" nearly all day long.  Very late in the day, the market started to decline, but then a whole new buying explosion occurred, driving prices to new highs for the day, and closing right on those highs.  In the end it was a "90% up day" in terms of NYSE-based data and a "90% up volume day" in terms of "stocks only" data, just barely missing a full-blown 90% up day.  

Volatility in both directions

By Lawrence G. McMillan

The general market, as measured by the Standard & Poor’s 500 Index, broke down badly this week, smashing through previous support at 1,120 and 1,100, and registering new lows for this bearish leg that started back in July.