fbpx Weekly Commentary 7/15/2011 | Option Strategist

Weekly Commentary 7/15/2011

By Lawrence G. McMillan

The market action this week has been quite bearish and, frankly, quite out of character in terms of the indicators, but it may also be a rather  severe reaction to the overbought conditions that had built up.      

The S&P 500 Index ($SPX) had strong upside momentum a week ago, but ran into resistance very near the April highs.      

Equity-only put-call ratios are bullish and have remained bullish even during this week's decline.      

Breadth was extremely strong on the way up, and has been extremely negative on the way down      

$VIX actually closed below 16 (barely) last week, and once again that was a harbinger of a market selloff.  Now $VIX is shooting upward, reaching above 21 today.      

In summary, we remain bullish as long as $SPX continues to close above 1300 -- based on the put-call ratio buy signals, at least.  A close below there would make us neutral, relegating the index to trading range status. 

Click here to view this week's charts

Sign up for The Option Strategist Weekly Updater to receive this market commentary delivered to your inbox each Friday for free.

Share this

Option Strategist
Blog Search

Recent Blog Posts

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.

-->