All systems are in bullish modes at this time. $SPX has broken out to new all-time highs, finally catching up to The Dow, Th Russell 2000, the Value Line Composite, and the NASDAQ Composite, which had already done so. There is support in the 2180 area.
Equity-only put-call ratios are on buy signals, as is the Total put-call ratio. These are not strong buy signals, by historic measurements, but suffice for now.
We have written about Peabody Coal (BTUUQ) a couple of times previously – amazed at the rapid advance and short squeeze that occurred there. That stock had a second surge, post-election, as did many other coal stocks. But the action there pales in comparison to what’s happened in the “Water Transportation” stocks this week. These include the big oil tanker companies and the general shipping of things on the ocean. The whole sector has been very strong, but the “king” is Dry Ships (DRYS).
Even though we are not planning a full newsletter next week because I’ll be on a ship (and I don’t know how good the internet connection will be, either), we do want to update our Thanksgiving-based trading systems.
For the sake of brevity, we won’t detail the “3 days before Thanksgiving” or the “day after Thanksgiving” trading systems – if you want to call them that. They are not profitable, no matter how hard you want to stand on your head to interpret the data.
The bulls had an enjoyable week, although it was not a spectacular one. The post-election rally has held together for the most part, except for a few sectors which are not benefitting from the anticipated "infrastructure boom."
$SPX edged to within 8 points of a new all-time yesterday, and the NASDAQ Composite was equally close. The Dow Jones 30 Industrials, the Russell 2000 Index, the Midcap 400 Index, and the Value Line Composite Index have already made new all-time highs.
This has been a successful seasonal trade in many years, and last year was the second best year in our history. We have used this in 22 of the past 23 years – skipping only 1995, for reasons which I no longer recall.
In this trade, we buy RBOB Gasoline futures and sell Heating Oil futures. This is the simplest way to establish the spread, eschewing futures options and ETF options – the options are just too illiquid in the February contracts, which is what we use for this spread.
Buy signals have abounded in the past week. In Figure 1, I have included Tuesday's night's action (vertical red line), as the market first plunged when it became a distinct possibility that Donald Trump would win the election. This was a very "Brexit-like" response to a surprise vote.
I used to think "weatherman" was the main occupation where you could be wrong constantly and still keep your job. Now I'm going to add "pollster" to that list.
Trump has won, but the world is not coming to an end. Futures plunged overnight – at one point touching limit down = 107 points! But prices have completely recovered, and futures were trading on the plus side just moments ago. Prices are still swinging around rather rapidly, but in general volatility is deceasing, and more buy signals are coming to fruition.
McMillan Analysis Corp is pleased to announce that we have formed a relationship with the award winning OptionVue Systems Software. OptionVue has been a leader in developing and providing options trading and analysis software since 1983 and we have always been impressed with the analytics and features in their software.
