fbpx Weekly Stock Market Commentary 9/8/2023 | Option Strategist

Weekly Stock Market Commentary 9/8/2023

By Lawrence G. McMillan

Stocks recently ran into some trouble at the 4540 area on the $SPX chart, after having bounced strongly off of the support at 4330 in mid-August. So, those two levels are what is containing the market at the moment. There is further resistance at 4600 and further support at 4200, but it seems to me that those 4330 and 4540 levels are what is going to determine the next breakout and thus the next move with decently strong momentum.

Meanwhile, the equity-only put-call ratios remain solidly on sell signals and are our most bearish indicator at this time. They both rose to new relative highs in the last two days, and as long as these ratios are climbing, they will be bearish for stocks. Only when they roll over and begin to decline will they revert to buy signals for the stock market.

Breadth has turned negative as well. This has rolled both breadth oscillators back over to sell signals, meaning that the last buy signal was quite short-lived. That's another whipsaw of sorts for this indicator, which has been subject to these quick reversals of signals often over the past year and a half. Both breadth oscillators are currently negative but not yet in oversold territory.

The indicators discussed above are what we generally call "market internals." They are mixed-to-negative. However, the volatility-based indicators are much more bullish and have been all along. $VIX traded all the way down to the yearly lows at 13 at the end of last week. Thus the trend of $VIX remains downward, and that is bullish for stocks. Moreover, the "spike peak" buy signal that was generated on August 11th is still in place.

In summary, a bullish case can be made for the $SPX chart as long as it holds above 4330, so we are holding a "core" bullish position (with a small delta). Then, we are trading other confirmed signals 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

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.