This morning, the $VIX April futures settled at 14.86, the lowest futures expiration since June of 2007 which was near the end of the last bull market. The $VIX index also opened this morning at a recent low of 14.31. Even though this might be considered overbought, with $VIX trending lower the market remains bullish.
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By Lawrence. G. McMillan
$SPX touched support and its rising 20-day moving average at 1310, and probed slightly below that level today before rallying.
Perhaps more interesting is the fact that the equity-only put-call ratios have remained on buy signals throughout the pullback over the last week.
There was similar action in the volatility indices ($VIX and $VXO). The calm in these volatility indices is another bullish indication, despite the falling broad market.
Only breadth is giving a negative signal at this time.
By Lawrence G. McMillan
The Standard & Poor’s 500 Index was not able to make new highs over the past week. In fact, selling set in and knocked the market down. However, there is still a general bullish overtone to the indicators, and so the bulls have certainly not capitulated yet. Ostensibly, the catalyst for this selling is the continuing, worsening situation in Japan. However, it is just as likely that the market had reached too much of an overbought condition, and that had to be worked off — which it has been, for the most part.
Trading has begun on the CBOE Futures Exchange (CFE) in Gold Volatility futures. If you’ll recall, a VIX-like calculation can be made on any set of option prices on an individual stock, as long as there are continuous markets being made in the options.
The CBOE has been publishing a “Gold VIX” under the symbol $GVZ for some time. This calculation is based on the options on the Gold ETF (GLD).
Now, futures have begun to trade on $GVZ. Their base symbol is GV, and there are futures in the May, June, July, Aug, and Sept at this point.
The market has spent nearly the entire week in a tight range, frustruating both bulls and bears.
Equity-only put-call ratios have continued to remain on buy signals, despite some occasional heavy put buying during the week.
Market breadth has been strong, for the most part. As a result, breadth remains on a buy signal, too.
Volatility indices ($VIX and $VXO) have drifted down to very low levels. In general, the decline in volatity is bullish for stocks.
$SPX has not made new highs (yet), but it has broken out above the 20-day moving average, the downtrend line from the highs, and the short-term resistance that had developed in the 1300-1320 area.
Equity-only put-call ratios have rolled back over to buy signals, which is a very significant positive intermediate-term development.
Breadth oscillators -- which are the most sensitive indicator of this group -- turned to buy signals over a week ago, and have remained on those buy signals ever since.
