The rally that began in mid-October was a fairly strong one that was backed by massive oversold conditions that existed at the time. By the time it got to 3900 (400 points off the lows), it was a bit vulnerable, and when Fed Chairman Powell made some very negative comments, the market quickly gave back 200 points. After that FOMC meeting, the market remained rather leery of the CPI data that was to be released early in the morning of November 10th. So, it traded in that 3700-3900 range while it waited. The CPI data was modestly encouraging (although it remains to be seen what the Fed thinks of it), and the market exploded to the upside as many traders and investors think that interest rates have peaked.
Join Larry McMillan as he discusses the current state of the stock market on November 7th, 2022.
The oversold rally that began in early October was proceeding at a good pace, and was strengthened by a breakout over 3900. However, the comments by Fed Chairman Powell after the FOMC meeting knocked the market down significantly. We have often referred to the fact that the current market bears great similarity to the bear market of 1973-1974, and this is yet another example. Back then, Fed Chairman Arthur Burns would speak, and the market would tumble.
One of the most reliable and profitable seasonal trades that we have in our arsenal is what we call the “October Seasonal Trade.” A seasonal trade is one based on the calendar, not on any price or market action.
This is a topic that has been so long-forgotten that it seemed like it might make a good article now, or at least provide a “refresher” for those who might remember it. Now that interest rates are actually high enough to “matter,” traders who need to put up collateral margin can benefit from the old technique of buying T-Bills with the cash in their account. If the T-Bills mature within 6 months, the trader can use up to 99% of the value of the T-Bills for collateral margin purposes, while earning the T-Bill rate on their cash. The 90-day T-Bill rate right now is about 3.75% (annual), which is more than any brokerage firm is paying you on your cash balances. The best rate at a brokerage firm is probably Interactive Brokers (IB) which is paying 2.58% on the cash balance in excess of $10,000 in your account.
Join Larry McMillan as he discusses the current state of the stock market on October 10, 2022.
Yesterday (October 6th), on the CBOE, someone bought 50,000 $VIX Mar (22nd of 2023) 150 calls for 0.19. So, that’s 50,000 contracts. Strike is 150 for $VIX (or technically, for the March (2023) $VIX futures. And the expiration date is roughly six months from now.
$VIX – the indicator which has not exactly been in tune with the negativity of this 2022 bear market – has now generated an intermediate-term trend sell signal. By that we mean that both $VIX and its 20-day Moving Average are above the 200-day Moving Average at this time. The sell signal will be in effect as long as that is the case. A previous trend sell signal occurred in December 2021 and was quite effective. In between, there was a trend buy signal, which was effective at first, but then deteriorated quickly.
Join Lawrence G. McMillan as he discusses the current state of his option-oriented indicators and what they are saying about the stock market. This video was recorded from his live webinar on September 19th, 2022.
Click here for a PDF slide deck of the presentation.
The broad stock market has broken out over major resistance at 4170 and should now be ready to challenge the 4300+ level. It is imperative for the bulls that these recent gains be held. That is, if $SPX were to slide back below 4170, that would be modestly negative, and if it fell below 4070, that would be extremely bearish.
