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.
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.
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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By Lawrence G. McMillan
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.
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.
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.
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.
By Lawrence G. McMillan
These oversold rallies are unbelievably strong – especially this one, which was preceded by three of four days in the “90% down day” category. Yesterday afternoon’s 45-point $SPX rally in 45 points was perhaps unprecedented, and now another 20 points have been tacked on today, as another afternoon rally is gathering strength. Makes one wonder who was selling previously, and where are they now?
By Lawrence G. McMillan
...The equity-only put-call ratios have rolled over to sell signals, and that is a major technical factor, in my opinion. Technically, the standard ratio was not yet a “confirmed” sell signal, but it likely will be after today’s numbers are posted.
By Lawrence G. McMillan
The CBOE has created “variance strips,” which is a way in which you can trade entire strips of $SPX options that are constructed according to the formula for determining $VIX. The beginning of trading awaits SEC approval.
These are primarily designed for professional traders, and many retail brokerage firms may not allow trading in the strips. Regardless, it never hurts to understand how various products work, for the knowledge may prove useful down the line.
