By Lawrence G. McMillan
Thursday's breakout upside move in the stock market has solidified the indicators together into a bullish posture. The chart of $SPX held onto a bullish picture even though the selling in the past two weeks was heavy at times. The 20-day moving average has been rising all along, and the index never closed meaningfully below that average
Equity-only put-call ratios have remained bullish, as they have continued to decline from their high peaks of a month ago.
By Lawrence G. McMillan
The stock market staged a strong rally on Tuesday. Was it just a “Turnaround Tuesday” — a reaction to an oversold condition that had developed via the heavy selling of last week — or was it a true change of sentiment from bearish to bullish? To answer that question, we can look to our technical indicators, for several of them are right on the brink of turning bullish. The bulls actually had a strong chance to effect that change today, and they did not.
By Lawrence G. McMillan
The market had a powerful showing Tuesday with the Standard & Poor’s 500 Index rallying 1.6% for the day. Market indicators suggest a potential 100-point rise in the index over the next few months.
Lawrence G. McMillan was the 2011 recipient of the The Options Industry Council's (OIC) Joseph W. Sullivan Options Industry Achievement Award. This recognition on behalf of outstanding contributions to the growth and integrity of the U.S. options market was presented to Mr. McMillan at the 29th Annual Options Industry Conference, held at the Westin Savannah Harbor, on May 13th, 2011. In this video, Larry accepts his award and discusses how options became a part of his life and explains how his best selling book, Options As A Strategic Investment, came to be.
By Lawrence G. McMillan
The market is finally staging a strong rally. Is it just a “Turnaround Tuesday” thing, or have the bears fumbled the ball (they weren’t moving it very well anyway)? I’m sure there’s plenty of room for debate regarding either of those stances, and both are probably true to some extent.
Today’s move solidifies support on $SPX at 1295-1300, and that remains an important area. On the upside, the important level to overcome would be the 1330 level.
By Lawrence G. McMillan
Put-call ratios are excellent measures of the sentiment of the general option-trading community. When the sentiment is that "too many" people are buying puts or calls, it is worthwhile to pay attention, for the majority are normally wrong at major turning points, and their actions can be interpreted into a market trading signal.
Those who are familiar with our strategies concerning takeover rumors and bids know that we eschew most rumors, preferring instead to concentrate on situations in which either a) the company has announced that it is “exploring strategic alternatives” – effectively putting itself up for sale – or b) has a bid in hand, but the stock is trading higher than the bid – indicating that perhaps a higher bid is forthcoming from another party. We have written about this approach in several feature articles in the past.
By Lawrence G. McMillan
The market action this week has been quite bearish and, frankly, quite out of character in terms of the indicators, but it may also be a rather severe reaction to the overbought conditions that had built up.
The S&P 500 Index ($SPX) had strong upside momentum a week ago, but ran into resistance very near the April highs.
Equity-only put-call ratios are bullish and have remained bullish even during this week's decline.
By Lawrence G. McMillan
The market was extremely strong through last Thursday, and then the wheels began to fall off. The market has fallen sharply since then, and both yesterday and today, late-day declines wiped out promising rallies.
