By Lawrence G. McMillan
The market has had a rough week as the dominant bearish traits of this market have emerged. A couple of oversold rallies have been attempted, but they have been unusually weak. The chart of $SPX is in a downtrend and that is the major trademark of this market.
The equity-only put-call ratios are both on sell signals. They are continuing to rise rapidly, and thus might be considered oversold, but they will be bearish until they roll over and begin to trend downward.
By Lawrence G. McMillan
Yesterday’s rally has quickly been forgotten, as the market has cascaded downward today in a series of three large drops. This is further evidence of the fact that the primary trend is down. In fact, considering the hype behind yesterday’s oversold rally, it is actually an even more negative sign that it was obliterated so quickly. The chart of $SPX is in a downtrend, and that is the most important thing. $SPX is once again nearly 3 standard deviations below its 20-day moving average (an oversold condition).
Optionstrategist.com
The June VIX Futures settled at 19.73 this morning ($VRO), up $1.71 from the May expiration. This month's settlement is the 2nd highest this year and is the 2nd consecutive higher settlement off the low April bottom.
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By Lawrence G. McMillan
$VIX spiked up to almost 20 last Friday and then reversed back downward to nearly 17. Currently, it stands at 17.82. A spike peak reversal of that magnitude is at least a short-term buy signal for the stock market. $VIX has probed to or above the 19 level four previous times since mid-April, and a tradable stock market rally has followed each time. Will this be the case again this time, considering that there are other, more negative, indicators at work as well?
By Lawrence G. McMillan
Breadth was terrible yesterday, making Wednesday a true 90% down day in terms of “stocks only” data and a 90% down volume day in NYSE terms. This is the first true 90% down day since March 10th. That usually means that one can expect a reflex rally in the next day or two, but also indicates that lower prices eventually lie ahead.
VIX Edging Higher: A Warning?
By Lawrence G. McMillan
The settlement for the CBOE Volatility Index (VIX) May futures contract was 18.02, up by a healthy percentage from the April settlement of 14.86. Moreover, VIX itself began to rise late this week. A rising VIX is generally symptomatic of a bearish stock market, so these rises may be a warning sign to stock holders that a correction is approaching.
This morning, the $VIX April futures settled at 14.86, the lowest futures expiration since June of 2007 which was near the end of the last bull market. The $VIX index also opened this morning at a recent low of 14.31. Even though this might be considered overbought, with $VIX trending lower the market remains bullish.
Trading has begun on the CBOE Futures Exchange (CFE) in Gold Volatility futures. If you’ll recall, a VIX-like calculation can be made on any set of option prices on an individual stock, as long as there are continuous markets being made in the options.
The CBOE has been publishing a “Gold VIX” under the symbol $GVZ for some time. This calculation is based on the options on the Gold ETF (GLD).
Now, futures have begun to trade on $GVZ. Their base symbol is GV, and there are futures in the May, June, July, Aug, and Sept at this point.
Several new volatility products have recently entered the market or will soon be listed for trading. The most promising of these is the new set of contracts to be listed on the Chicago Board Options Exchange. Trading began on March 25 in Gold Volatility Index futures on the CBOE. Options on them will be listed on April 12. Many other new products will follow in due course.
