The S&P 500 ($SPX) remains in a solid uptrend, but yesterday marked a notable shift: a confirmed McMillan Volatility Band (MVB) sell signal was triggered. This is the first such signal in this market cycle — and it may mark the start of a short-term pullback.
We rarely buy out-of-the-money calls, because when you do, there is a chance that you could be right about the direction of the underlying stock (up), but still lose money. Normally, we prefer a slightly in-the- money call with a delta of 0.6 or higher, so that it will move more in line with a rising stock. In that case, if I’m right about the direction of the stock, I have a strong chance of making money with my call – even though it may suffer some time decay.
The stock market has continued to make new all-time highs, accompanied by strong internal indicators. Eventually, overbought conditions may become confirmed sell signals, but so far that x hasn't been the case.
$SPX has support at 6150 (the previous highs), 6020-6060 (the highest open gap on the chart), and 5920. If it were to fall below 5920 then the $SPX chart would no longer be bullish, but we are not looking for that to happen.
The stock market, has continued to rise, registering new all-time highs repeatedly. It appears that the current breakout to new all-time highs is stronger than the failed one of last February. There is support at 6150 (the old highs), 6020 (the highest circled gap on the accompanying $SPX chart in Figure 1), and 5920. A pullback below 5920 would negate the current upside breakout, but I don't expect that to happen.
Apple ($AAPL) has just triggered a buy signal based on our weighted put-call ratio, one of our more reliable sentiment-based indicators for this stock. Historically, these signals have generally preceded intermediate-term rallies in $AAPL, and the current setup looks promising.
Periodically we publish the chart below, which shows the $VIX composite from 1989 through some more current date – 12/31/24 in this case. We usually update this chart annually, because it is meant to give some insight as to where $VIX goes at what time of the year.
$LYFT has been a classic underperformer since its IPO, trending steadily lower for years. But recently, it gave bulls a reason to pay attention: a weekly MVB Buy signal.
While the long-term downtrend hasn’t fully reversed, there are signs of accumulation under the surface. On the weekly chart (above), you’ll see the recent MVB Buy signal suggesting the tide may be starting to shift.
$RDDT issued its first weekly McMillan Volatility Band (MVB) Buy signal (chart above) this week since being listed—an encouraging development for bullish traders watching the stock's momentum.
On the daily chart (below), $RDDT broke out above the key resistance area near 130, successfully retested that breakout level, and has since resumed its move higher. This kind of confirmation—weekly and daily alignment—is what makes the MVB indicator so valuable.
Stocks sold off on the Israel-Iran conflict, but only modestly as it appeared that traders were most worried about the U.S. directly entering the conflict which hasn't happened. Moreover, there has not been any particular disruption in the flow of oil.
