The market as measured by $SPX continues to trade in a narrow range between roughly 7600 and 7800. A clear breakout of that range would generate a momentum trade. Considering that the range is only about 3% of $SPX's value, it's amazing that it has lasted as long as it has. The broad market is presenting a different picture, and we'll get to that in the next article.
The Cboe (followed by other exchanges) has extended the trading hours for certain stocks and ETFs. This has already taken place, although not every option trading platform has implemented its trading for the new hours.
The morning extended session runs from 7:30 a.m. (Eastern time) to 9:25 a.m. Then regular option trading begins at 9:30 a.m.
We're excited to introduce the newly redesigned The Daily Strategist, McMillan Analysis Corp.'s premium options advisory service.
We've streamlined the format to make it easier for subscribers to identify trading opportunities, follow our recommendations, and manage open positions.
It is said that a bull market climbs a Wall of Worry. In the modern context, this statement remains true of course, but also encompasses $VIX. In the past weeks, we have published a few articles detailing just how many articles are circulating in the financial media about the forthcoming $VIX explosion. That hasn’t happened yet, by the way, and probably won’t until people get more complacent about the current price of $VIX (and the stock market, as well). Of course, the Wall of Worry extends to other sectors of the market.
We’re excited to introduce McMillan Morning Market Commentary, a new subscription designed to give traders and investors a concise look at the broad stock market and our current market outlook at the start of the trading day.
As we’ve been commenting for a couple of months now, “everyone” is expecting a rise in $VIX. In classic stock market contrarian fashion, $VIX has steadfastly remained at low levels – countering the majority opinion and frustrating volatility bulls. That would include us, to some extent, although it is not surprising to me to see the market act in a way that causes the majority to be wrong. That was our point in the article we wrote in last week’s newsletter.
Stocks continue to slip after having made new all-time highs on August 14th. The 7600 support level for $SPX has now come under attack, and it was briefly violated yesterday. Today, however, the CPI number although "in line" was interpreted as a huge relief, and the market is rallying strongly. So support extends down to 7580 or so. The general support area is now 7580 7620.
After making new all-time highs on August 14th, $SPX has struggled a bit. There is a very minor downtrend line on the chart right now, after a series of negative days accompanied in general by terrible breadth. That pullback seems to have culminated with a retest of the 7600-7620 support level this past Tuesday, September 1st. That support level is marked with a thick red horizontal line on the $SPX chart in Figure 1. If it gives way, a much more negative picture will emerge, but so far support has held.
Traders were a bit leery of some potentially volatile events this week, but so far they have not proven to be troublesome. The NVIDIA (NVDA) earnings were positive, and the stock rose. That was a relief to the market. Also, Fed Chair Warsh made the Keynote Address at the Jackson Hole Monetary conference this morning. The market's reaction is muted.
