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By Lawrence G. McMillan

The tensions regarding a potential Russian armed invasion of Ukraine have caused some wider than usual swings in the market, but the underlying causes of the bearish action on the stock market are far greater than this potential conflict.

$SPX remains in a downtrend (see blue line on the chart in Figure 1), and that is what makes the chart bearish. The fact that the various short-term moving averages and the "modified Bollinger Bands" are all sloping downwards only adds to the bearishness.

There is short-term support in the general area of 4370, since two recent days have bottomed there. Stronger support exists in the 4200 4300 area. As for resistance, that exists at 4600, and a close above that level would be bullish enough to consider taking a more bullish stance on the broad market.

Equity-only put-call ratios remain at extremely high levels on their charts and are thus oversold. In reality, until these ratios clearly roll over and begin to decline, there won't be a confirmed buy signal, despite their oversold status.

Meanwhile, market breadth has been swinging rather wildly back and forth on individual days. This has caused the breadth oscillaters to generate signals that have been whipsawed. Breadth signals are inconclusive at this time.

$VIX has had a couple of sharp probes upward recently, and those have produced $VIX "spike peak" buy signals. Perhaps more significant, though, is the trend of $VIX: $VIX is trending higher, that is a negative for the stock market.

Overall, this is a negative environment that requires the holding of a "core" bearish position. That will remain true as long as $SPX is trending lower and $VIX is trending higher. Other indicators' signals can be traded around this "core" position when they are solidly confirmed.

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

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