fbpx Weekly Stock Market Commentary 12/24/2020 | Option Strategist

Weekly Stock Market Commentary 12/24/2020

By Lawrence G. McMillan

The bears took advantage of a small window before the "Santa Claus rally" begins to drive $SPX down a bit. Once again, support in the 3630 3650 area has held. We are still viewing 3550 as the more important support area, for if that were broken, then the $SPX chart would take on a bearish aura.

Equity-only put-call ratios continue to decline, and thus they remain on buy signals. They are extremely overbought, but that is not a sell signal.

Market breadth has begun to slip. This was the strongest indicator for the market's most recent rise since the Election. However, this week, on January 22nd, the breadth oscillators rolled over to sell signals. Those were quickly stopped out by an improvement in breadth on January 23rd, but the warning shot has been fired.

Volatility has had some surprises this week. On the 21st, $VIX generated a new "spike peak" buy signal.

In summary, there are lot of cross-currents right now, but no confirmed sell signals at this time. Moreover, there is a new buy signal ($VIX "spike peak"). So, we remain bullish, but will certainly trade sell signals when and if they occur.

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.