fbpx Weekly Stock Market Commentary 6/3/2022 | Option Strategist

Weekly Stock Market Commentary 6/3/2022

By Lawrence G. McMillan

The trend of $SPX is negative (blue lines on the chart in Figure 1), and just last week saw a new lower low to go along with the repeating pattern of lower highs and lower lows. The trend will be negative until that is reversed.

An oversold rally is underway. There is a chance that this might be the beginning of a new leg upward in the bull market, but that seems very unlikely to me. This oversold rally has run into resistance at the 4150 level. If it should more higher, there is strong resistance at 4300.

Equity-only put-call ratios remain on buy signals, as they continue to fall. The weighted ratio is falling more rapidly than the standard ratio. The buy signals will remain intact until the ratios once again roll over and begin to rise.

Market breadth has been generally positive over the past ten days. As a result, both breadth oscillators are on buy signals. Even so, just one or two days of strongly negative breadth could cancel out these buy signals.

$VIX has fallen as this oversold rally has developed. It is now below 26 for the first time in about a month. The "spike peak" buy signal (green "B" on the chart in Figure 4) remains intact. It began on May 11th and will be in effect for 22 trading days, unless stopped out by $VIX re-entering "spiking" mode.

The trend of $VIX, however, has not changed and remains upward for $VIX (and thus bearish for stocks). This bearish indicator woulld turn neutral if $VIX were to close below 23.

In summary, we continue to hold a "core" bearish position because of the trends of $SPX (down) and $VIX (up). We are, however, trading confirmed short-term signals around that "core" bearish 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

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.

-->