By Lawrence G. McMillan
The feature article discusses ways in which the market is “overbought,” from time spent above the 200-day moving average, to the time since a 10% correction has occurred, to the low state of the volatility indices. In essence, though, these are not sell signals, for the market can continue to rally even while it is overbought.
Our market opinion (page 6) remains bullish, although some sell signals are beginning to appears – most notably a “modified” Bollinger Band sell signal. Also, if breadth deteriorates any further, we will get sell signals from our breadth oscillators as well. But until those sell signals actually occur, we remain bullish with tight stops.
On page 7, there is an article detailing how the “modified” Bollinger Band sell signal works. There is also a specific SPY option recommendation based on the signal.
On page 9, there is a $VIX calendar spread recommendation based on extreme sentiment readings in the $VIX futures and options.
Also, there are optionl buy recommendations on page 9, in both Yahoo (YHOO) and JP Morgan (JPM), based on the weighted put-call ratios.
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