Two of the hardest-hit stocks in the S&P 500 this year — UnitedHealth Group ($UNH) and UPS ($UPS) — both issued daily MVB buy signals today. While this is a notable technical development, it’s worth viewing these signals within the context of each stock’s broader downtrend.
$XLP (Consumer Staples Select Sector SPDR Fund) just triggered a put-call ratio buy signal, as its weighted 21-day put-call ratio peaked at extreme levels and has now begun to roll over. This type of signal typically suggests that bearish sentiment has reached a capitulation point, and that upside follow-through is likely.
Join Larry McMillan as he discusses the current state of the stock market on August 4, 2025.
The buildup of overbought conditions has manifested itself in new confirmed sell signals. However, the $SPX chart is still positive, and will remain so, certainly as long as it's above 6150. A bullish case can theoretically be made for $SPX all the way down to 5920, but at this point, if it were to fall back below the February highs (6150), that would be psychologically damaging for it would mean that the whole breakout in June and July was a false one.
As we stated many times in this week's Stock Market Commentary, there are overbought conditions but no confirmed sell signals (yet). However, we know volatility is low, and we also know that it generally begins to rise in August.
To bolster that last statement, the chart of Composite $VIX is reprinted below. We had written an article about this a few issues ago. The most notable thing is point C on the chart. That is, $VIX typically makes its yearly lows in July and then begins to rise after that.
The S&P 500 ($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.
