fbpx Weekly Stock Market Commentary 10/18/2019 | Option Strategist

Weekly Stock Market Commentary 10/18/2019

By Lawrence G. McMillan

Stocks have generally reacted favorably ever since the oversold "washout" on October 3rd (or maybe you prefer the other one, on October 8th). Those created oversold conditions that have spurred buying, along with somewhat positive news on the China trade front. However, there are a couple of things that keep this chart from being all-out bullish.

The first, of course, is the huge resistance at the double tops at 3025-3030. Those are also the all-time highs for $SPX. The other is the fact that the 20-day moving average is still declining.

Equity-only put-call ratios have remained on sell signals, since there has been relatively heavy put buying even though the broad market has been rallying over the past two weeks.

Market breadth was solidly strong for a while, and both breadth oscillators moved back to buy signals. They have reached modestly overbought territory. However, one strong day of negative breadth could easily roll them back over to sell signals.

Volatility has gotten more bullish as well. First, there is the matter of the $VIX "spike peak" buy signal. Then, $VIX fell back below its now-declining 200-day moving average. That is bullish for stocks.

In summary, the indicators are mostly bullish (still waiting on the put-call ratios), but the $SPX chart remains a cause for concern.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

The Option Strategist Newsletter $29 trial

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.