By Lawrence G. McMillan
(Barron's) - This bull market is rather unpopular—and that's good.
Since the rally began in early June, most investors and traders have doubted the advance because they were so afraid of Europe's debt crisis, U.S. economic problems, and even the U.S. presidential election.
By Lawrence G. McMillan
In a continuation of the irregular series, explaining our analytical techniques, we are going to discuss how we interpret put-call ratio charts. This series began two issues ago with an article on naked put selling. Future articles in this series will encompass other aspects of position selection: calendar spreads, volatility skew-based trades, ratio spreads, and so forth.
By Lawrence G. McMillan
Stocks have rallied to the top of the bullish $SPX channel (see chart, Figure 1). The top of the channel is at about 1410 currently, and the yearly highs are at 1420. So, that area is likely to provide some resistance for now.
Meanwhile, equity-only put-call ratios remain bullish.
Market breadth indicators are on buy signals, having reversed negative signals from the previous week.
By Lawrence G. McMillan
Bears are having trouble understanding why the stock market continues to rise, but in reality it’s due in part to the fact that there are still too many bears. Many of the people who would be sellers have already sold and are now sitting back waiting for the market to go down. That strategy rarely works.
By Lawrence G. McMillan
The fifth edition of the best-selling book, Options As A Strategic Investment was released today, August 7th. An updated version of the Study Guide has also been released. The first edition was released in late 1979 with a 1980 copyright. Further editions followed in 1986, 1993, and 2002. Hence, it has been ten years since the last update.
By Lawrence G. McMillan
Almost like clockwork, the pendulum of this market swings back and forth within the bullish trading range that $SPX occupies. As long as $SPX stays within this range, the overall picture is bullish.
However, this time around, we are starting to see some more deterioration in some other technical indicators. In particular, the equity-only put-call ratios are beginning to seriously weaken. Moreover breadth indicators are on sell signals.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — Since the broad stock market, as measured by the Standard & Poor’s 500 Index, bottomed in early June, the ensuing rise has been met with doubt, skepticism, and even outright derision (dare we say “hate?”) in some cases.
By Lawrence G. McMillan
This week's selling drove $SPX down to the lower end of its bullish trading channel (see Figure 1). The selling managed to dissipate right near the lower channel, and so the bullish pattern is maintained.
Equity-only put-call ratios have remained bullish throughout this recent decline, just as they have generally remained bullish since generating intermediate-term buy signals right near the June stock market lows.
Market breadth wavered early in the week, but are back on buy signals now.
By Lawrence G. McMillan
The recent sharp, 3-day decline in stocks produced very divergent readings in the breadth oscillators that we follow. Such divergences are rare – occurring about twice per year. When they do occur, though, they are generally a good buy signal for both the short- and intermediate-term.
By Lawrence G. McMillan
Fear was strong in the market yesterday, as selling ballooned by early afternoon. The losses were larger and increasing when a rumor started that the Fed is close to taking more action. That news reversed the market upward, cutting some of the losses about in half. But then, after the close, Apple (APPL) reported a slight earnings miss, and S&P futures plunged another 7 points in after-hours trading.
