Join Larry McMillan as he discusses the current state of the stock market on April 24, 2023.
Ed Tilly is the current Chairman and Chief Executive Officer of CBOE Global Markets, after having taken over from Bill Brodsky as CEO in 2013 and Chairman in 2017. Ed began his career as a stock clerk on the CBOE trading floor in 1987, then became a member as a market-maker in 1989, before electing to move into CBOE’s “front office” full time in 2006. I spoke with Ed recently to get some of his thoughts on his career at CBOE.
Stocks are definitely having trouble with overhead resistance near 4200. This has been a resistance area since last August (it was a failed attempt to close the gap on the island reversal, noted by the circle on the chart in Figure 1). Then it halted the rally in February, and now it has seemingly halted the current rally. Thus, the $SPX chart is not bullish, in that there is not only the resistance at 4200, but resistance at 4300 as well.
Other bear markets have shown similar behavior: realized volatility increases by a relatively small amount, and $VIX therefore does not accelerate to extreme highs. Often, late in the bear market – near its bottom – is when we see a sharper increase in volatility.
The rally that began in mid-March is persisting. Market internals remain positive, and that is finally having enough of an effect on $SPX (and the market psyche) to push prices higher in a relatively slow manner. Even so, there is formidable overhead resistance at 4200 and 4300, so the $SPX chart will not be outright bullish until those levels are exceeded (in my opinion).
Ed Kelly was one of the original floor brokers on the CBOE from Day One. He served on many important committees and was a stalwart at the Exchange. Joe Doherty – whose own recollections are posted elsewhere on this website – had this to say about Ed: “ He was the consummate professional from the moment he stepped on the floor. I very much liked his appreciation of what the early CBOE was, his recognition of what it could become, and his willingness to work with that long term potential in mind. This at a time when many of his contemporaries, in the early days, viewed the trading floor as a candy store from which they should grab as many sweets as fast as they could.”
One of the questions that traders – both retail and professional – have been asking all throughout the bear market that began in January 2022 is “What Is Wrong With $VIX?” Everyone remembers the $VIX explosions during the crisis events over the years, but there is little memory of $VIX seemingly ignoring a bear market decline such as the 25% that has occurred in this bear market. In reality, there have been similar declines with a non-responsive $VIX before, but it is just not something that stands out in one’s memory like the upward spikes do. In this paper, we’ll look at some of those past occurrences and see if we can discern if there is indeed anything wrong with $VIX or not.
Justin Mamis was a famous stock market technician (he died in 2019). I particularly recall that he and James Dines were the only newsletter writers that seemed to be consistently bearish on the 1973-74 bear market, while it was in progress. Mamis wrote three books and created a “cycle” chart of the stock market. Many technicians today still cite his cycle chart – printed below.
Jim Dalton was the first Marketing Director of the CBOE, and he was hired by Joe Sullivan to put together the marketing team for the exchange. As Joe Sullivan wrote in his recounting of the era (be sure to read that recount as well), “Jim Dalton...built the best marketing team assembled at any exchange in that era if not ever.”
