fbpx Weekly Stock Market Commentary 8/27/2021 | Option Strategist

Weekly Stock Market Commentary 8/27/2021

By Lawrence G. McMillan

After bouncing off of support at 4370 last week (the third time that $SPX has found support at that level --meaning it is now extremely important support), $SPX rallied to new intraday and all-time highs. The NASDAQ-100 ($NDX; QQQ) did the same, but the Dow ($DJX) has lagged behind.

The support levels are marked with red horizontal lines on the chart in Figure 1, but really the only one that matters is 4370. If that is broken, the others might fall soon thereafter. But as long as $SPX remains above 4370, its chart is bullish.

Since the chart of $SPX is the most important indicator, this means that a "core" long position should be maintained.

Equity-only put-call ratios are mixed. The Standard ratio (Figure 2) is rolling to a buy signal, gradually. The Weighted ratio (Figure 3) just made a new relative high, so it remains on a sell signal.

Breadth improved dramatically over the 4-day trading period beginning with last Friday, August 20th. Even so, the oscillators are split, with the "stocks only" being on a sell, while the NYSE oscillator is on a buy signal.

The most recent $VIX "spike peak" buy signal occurred just a week ago, on August 20th. The trend of $VIX is lower as it remains below the declining 200-day moving average, and so does the 20-day MA of $VIX. Those are all bullish signs for stocks.

In summary, retain a "core" long position because of the positive nature of the $SPX chart. If support at 4370 is broken, that would be a big negative. Meanwhile, confirmed signals in both directions can be traded around that "core" position.

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.