$SPX has broken out above resistance at 2950, and that has changed the picture to a bullish one. There is now strong support at 2940 the top of the previous trading range that $SPX traversed six times (three up, three down) during the month of August. A close back below 2940 would be negative, because that would bring $SPX back into the trading range once again.
Teh equity-only put-call ratios remain on buy signals, and now the Total put-call ratio has joined in with a buy signal as well.
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Once again, $SPX has traversed the 2825 to 2950 range twice in the past week. First, it fell nearly the entire length of the range in one day (August 23rd) and then has come all the way back to the top of the range in the remaining four days. A breakout above 2950 would be bullish, but a breakdown below 2825 would be very bearish.
In a somewhat major new development, both equity-only put-call ratios have rolled over to buy signals in the last two days.
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The Volatility Capture CTA strategy is a variation of Volatility Capture that uses VIX futures on a tactical basis to hedge, instead of purchasing VIX options on a continual basis. This pure futures version has a slightly different profit graph and has the potential for better returns in most cases due to the lack of drag from the purchase of VIX options.
The $SPX chart remains bearish. There is support at 2825. There is probably stronger support at 2720-2730, the area of the March and May lows. As for resistance, the major resistance area remains 2940-2950, which is not only the recent tops, but is also the psychological resistance caused by the fact that the July 2019 activity look like a false upside breakout to new all-time highs.
The equity-only put-call ratios remain on sell signals (Figures 2 and 3).
Episode 4- Discussing Options as a Strategic Investment — With Author Larry McMillan
In today’s episode, Nell Sloane of Capital Trading Group speaks with Larry McMillan, author of the bestselling book “Options as a Strategic Investment,” popularly known as the options bible. Larry has appeared on CNBC, Bloomberg, and Wall Street Journal, and he continues to make valuable contributions to the finance industry.
In this episode, you’ll learn:
The mBB indicator is probably at its best when trying to identify when to sell something that is in a parabolic rise (or when to buy something that is in freefall). Typical moving averages are too slow to catch the movements, but the mBB seem to do a good job with $SPX. In the past, we’ve often looked at using the mBB strategy on something other than $SPX, but it never seems to work all that well, although our sample size is small. I recall that we attempted to use it on Apple (AAPL) as a buy signal last year.
The CBOE introduced the Volatility Index ($VIX) in 1993. The calculation of $VIX has changed a couple of times over the years, and due to the complexity of those calculations, $VIX itself cannot be traded. However, in 2004, $VIX futures were listed, and in 2006, $VIX options were listed. $VIX futures are the underlying instrument for all of the Volatility ETN’s and ETF’s that exist today (VXX, for example).
Stocks are still in a negative mode, despite the presence of some very strong rally days emanating from oversold conditions.
The 2940-2950 area represents resistance for several reasons. Meanwhile, there is support at 2825, where $SPX has bottomed on three separate days recently. Below there, the support at 2720-2730 is more identifiable, for that's where $SPX bottomed out in both March and May.
Equity-only put-call ratios continue to rise, thus remaining on sell signals.
