There are a lot of cross-current buffeting this market currently, and another major one has been added: President Trump has tested positive for the corona virus. This raises all sorts of uncertainty about governance (will the Vice President have to take over?) and the election. There is no way to know how this is going to play out. All we do know is that the S&P futures reacted only mildly dropping about 50 points on the news. So, the following commentary is based on the technical factors that we do know.
There are currently a number of factors affecting the CBOE’s Volatility Index ($VIX), most notably the upcoming Presidential Election and the fears of market volatility that a contested election might foist upon the stock market. But there is another element that is affecting $VIX, and it is not getting much press. Specifically, it is the after-effect of an initial bear market “shock” on $VIX.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 28th, 2020.
The market is in a stair-step pattern lower. This is a relatively orderly decline, compared to the "smashes," if not "crashes," of Feb 2018, Oct 2018, Dec 2018 and March 2020. But the bears are in charge now that the 3280 level has been broken.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 21st, 2020.
A significant battle has developed between the bulls and the bears. There is resistnace at 2425 and support at 3310-3330. A closing price breakout from that range should be significant, especially on a close below 3280. Unless there is such a breakdown, the $SPX chart can still be considered to be bullish.
Given the current market climate and uncertainty surrounding the upcoming presedential election, it makes sense to consider hedging your portfolio. The following free articles from our archives can help you learn more about portfolio protection with options.
Join Larry McMillan as he discusses the current state of the stock market on Monday, September 14th, 2020.
Join Lawrence G. McMillan to learn why certain option data is useful in helping predict broad market movements. Larry McMillan will discuss the current state of those indicators. He will share why put-call ratios are powerful, contrary indicators with a good track record of market prediction. He will also discuss why volatility derivatives and indices are useful, especially in determining extreme oversold conditions and buying opportunities, and also in discerning the trend of the broad stock market. Lastly, Larry will touch on the current state of market breadth and how it relates to market prediction as well.
The selling that began on September 3rd has gained momentum, and as the market has declined, confirmed sell signals have been registered in several areas. There is one major roadblock for the bears, though, and that is that the chart of $SPX is still in an uptrend. In my opinion the support at 3280 is the one that needs to hold. If it doesn't, then the $SPX chart will have succumbed to a bearish pattern.
