Since we are at the inception of a new year and a new decade (if you adhere to the notion that the decade begins with 2020 and not 2021), it is sometimes useful to see how the patterns of previous years have played out. The top chart on the right is a composite of all years ending in ‘9.” The orange line shows how the “average” of all stock market years has performed. The Blue line depicts the performance only of years ending in ‘9,’ and you can see that it is strong. Typically there is a decline early in the year (January-February) and then it’s off to the races for the remainder of the year – with minor corrections in May-June and September-October. The year that just concluded (2019) didn’t fit that pattern exactly, but it was certainly a very bullish year (Compare the chart in Figure 1 on Page 1).
Stocks backed off today, but the bull market is still intact so far. There is support on the $SPX chart at the various horizontal red lines in Figure 1. There isn't MAJOR support, though, until you get down to 3070.
Equity-only put-call ratios are at extremely low levels, due to heavy call buying during most of the recent three-month stock market rally. But they are not on confirmed sell signals yet.
The Fear Of Missing Out (FOMO) appears to be the theme in recent days. $SPX and other major indices are roaring ahead, despite a relatively narrow number of stocks carrying the load. But one thing is sure: for now, the $SPX chart is extremely strong.
The market could hardly be stronger than it is. $SPX, NASDAQ, and the Dow are making new intraday and closing highs almost daily.
There is now support at 3150, which had been a minor resistance area in late November and early December, before the Index blasted up through there on December 12th -- and hasn't stopped since. Below that, there are support areas at 3130 (minor), 3065-3070 (strong) and 3025-3030.
This article was originally published in The Option Strategist Newsletter Volume 17, No. 6 on March 27, 2008.
Amongst our array of technical indicators is the put-call ratio. We use it extensively in analyzing the broad market (equity-only putcall ratios) as well as individual stocks and, especially, futures. It is less useful in the indices and ETF’s, but sometimes has validity there, as well. Furthermore, we use $VIX derivatives – particularly the futures – as predictors of short-term moves in the broad market as well. These $VIX derivatives have been very useful and accurate indicators, with two or three great “calls” again in the last week. So, the question becomes, should we be looking at put-call ratios on $VIX – trying to combine these two indicators which, separately, have proven to be quite useful in their own right? As you shall see, the answer is not completely clear, but there does seem to be some usefulness in $VIX put-call ratios.
This article was originally published in The Option Strategist Newsletter Volume 20, No. 23 on December 9, 2011.
This is the time of year when even the media talks about seasonality. Of course, that doesn’t mean they understand what they’re talking about. Why would it be different on this subject than any other?
We have frequently mentioned the positive seasonality that takes place between Thanksgiving and Christmas. It’s unclear exactly why this happens, but it does. In fact, this particular seasonality doesn’t even have a cute name. But it certainly seems to work.