fbpx Weekly Stock Market Commentary 7/30/2021 | Option Strategist

Weekly Stock Market Commentary 7/30/2021

By Lawrence G. McMillan

As $SPX has recovered from its July 19th lows and driven to new all-time highs, not a lot has changed regarding the overall picture. It's still the big-cap tech stocks leading the way, as the NASDAQ- 100 ($NDX; QQQ) and Dow ($DJX; DIA) are near all-time highs as well. But the internals of the market are still weak as manifested in the Russell 2000 Index ($RUT; IWM).

Technically, the chart of $SPX remains strong. There is potential support at 4233. If that gives way, then the chart will no longer be considered bullish. There is further support below that, at 4165 and 4060, both levels which have been tested as valid support.

One primary area of internal weakness is the equity-only put- call ratio data. Put buying has remained relatively heavy during the month of July, and these ratios continue to rise. That means they are on sell signals.

Another area of internal weakness has been breadth. Breadth has improved quite a bit since the July 19th lows and both breadth oscillators are on buy signals, but not at the levels one would expect with $SPX making new all-time highs.

Contrasting the negative internals implied volatility generally has remained a friend to the bulls. $VIX has not exploded for any length of time, and even if it does, a new "spike peak" buy signal quickly follows.

In summary, the bullish case is still intact, as long as $SPX continues to remain above 4233 and as long as $VIX is trending lower. Having said that, we will trade various sell signals alongside that "core" bullish position when they are confirmed.

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.