By Lawrence G. McMillan
The CBOE Futures Exchange (CFE) has launched a new volatility futures contract – this time on the Emerging Markets ETF (EEM). The volatility index (i.e., the EEM VIX) is calculated from EEM options and is listed under the symbol $VXEEM. The futures on that index trade with a base symbol of VXEM. Currently there are March, April and May futures trading. If you’ll recall, after the initial $VIX futures were listed on the CFE, the only other futures to be listed were those on the Gold ETF (GLD).
By Lawrence G. McMillan
The over-riding characteristic of this market since the first of the year is boredom. Daily ranges are tiny, and volatility is practically non- existent. This is ironic, of course, since at the end of last year, so many traders were certain that volatility would increase dramatically once the holidays were over.
The $SPX chart is in an intermediate-term uptrend. The dominant trend line is the rising one that connects the October and November bottoms.
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By Lawrence G. McMillan
Monday was a very boring market day (again), which did nothing to chance the technical situation at all. Breadth was actually fairly positive, so the breadth oscillators remain on buy signals, and the oscillators are modestly overbought. The equity-only put-call ratios remain strongly on buy signals as well. $VIX did rise a little, but not enough to change the fact that it is still in a downtrend, and that – coupled with the fact that the $VIX futures term structure is still positively sloped – is bullish.
By Lawrence G. McMillan
The stock market finally was able to take advantage of the favorable seasonal pattern and break out to the upside. It is now imperative that $SPX take out the October highs at 1293. It would be bearish if $SPX closes back below 1260.
Equity-only put-call ratios remain on buy signals.
Market breadth (advances minus declines) has been acceptable but not strong. This is a potential problem, and is one of the few negative divergences.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — The Standard & Poor’s 500 Index is hovering near 1,260 once again. What makes this significant is that this is the area not only of the 200-day moving average of the Index, but it is also the point where the index meets the downtrend line connecting the recent market tops.
By Lawrence G. McMillan
The Standard and Poors 500 Index ($SPX) is hovering near 1260 once again. What makes this significant is that this is the area not only of the 200-day moving average of the index, but it is also the point where the index meets the downtrend line connecting the recent market tops. A close above 1270 would be a clear upside breakout.
Both the standard equity-only put-call ratio and the weighted ratio are on buy signals.
By Lawrence G. McMillan
...We still expect a bear market to unfold – one that will be far more severe than what we’ve seen in the last few months (although perhaps not so volatile). It is likely that the next bear market will take out the 2009 lows, thereby souring an entire generation (or two) on stock ownership for much of their lives – as happened with investors in the 1930's.
By Lawrence G. McMillan
Tuesday's big rally was enough to swing things over to the bullish camp, heading into the year-end. The continued bullishness has carried the market to the point where it has now reached the traditionally bullish Santa Claus rally time frame: the last five trading days of one year and the first two of the next.
The $SPX chart is confined by two trend lines (Figure 1). A breakout through either trend line should propel a sizeable move in the same direction.
By Lawrence G. McMillan
With this newsletter, we have reached 20 full years of publication. Hopefully, there will be 20 more! As far as the stock market goes, it was a pretty wild year, but not necessarily out of character with the ever-increasing volatility that the market has exhibited much of the time in recent years. Ever since the manipulated interest rate environment and accompanying bull market of 2006, where $VIX repeatedly dipped below 10, markets have been volatile. It began with the volatility explosion in February 2007 and continues to this day.
