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Two Major Signals Lurk

When a bullish market is too steady for too long, overbought conditions occur. These are normal and are usually worked off by a (perhaps) sharp, but short-lived correction. However, there are other kinds of extremes that arise that are not so easily worked off, nor so short-lived in their ramifications. Two of those are now building up, and they may signal a very volatile market in the near future. In fact, there is a third – the steepness of the $VIX futures term structure – but that’s something that we’ve discussed in detail before.

Stock Market Commentary

The following Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

$SPX fell rather sharply in the days after it made a new high on November 5th, the day of the post-FOMC meeting euphoria. As a result, there is major resistance in the general area of 1220.

The equity-only put-call ratios are once again at odds with each other. The weighted ratio is still the one upon which are putting the most weight, and it is on a sell signal.

The breadth indicators have returned to buy signals.

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TradeStation Announces New LiveOnTheWeb Spotlight On Seminar

Larry McMillan will be doing a free webinar for TradeStation on December 7th. See the press release below for more information and to sign up.

GlobeNewswire - Nov 15 at 07:40
Company Symbols: NASDAQ-NMS:TRAD

Stock Market Commentary

The following Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

The S&P 500 Index ($SPX) could not hold the attempted break out over resistance at 1120 last week. So far, the pullback from that level has been orderly -- not even retreating to the rising 20-day moving average.

The intermediate-term indicators are still bullish. $SPX is in a general uptrend, above support at 1180-1200, and above its rising 20- day moving average.

MTA Interview

Larry McMillan was recently interviewed by the Market Technicians Association. Listen to the interview at http://media.mta.org/podcasts/2010-NOV09-larrymcmillan.mp3.

Visit the MTA Website at http://www.mta.org.

Stock Market Commentary

The following Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

Despite good strength following the FOMC meeting, the market has to clear two more hurdles before the bulls can claim to be in charge: it has to get by Friday's unemployment report, and it has to overcome resistance at 1220 on $SPX.

Let's begin with the $SPX chart. Notice the positive momentum. Both $SPX and the 20-day moving average continue to rise.

The weighted equity-only put-call ratio continues to be bullish.

Election Day Commentary

The market is in something of a holding pattern as this is election day, 2010.  The expectations are, of course, for a Republican victory to reclaim the House, and now there is even a reasonable chance that they take the Senate, too.  The market views this news as very positive.  Not to throw cold water on the never-ending party, but it should be noted that the first Republican gains against President Roosevelt came in the mid-term elections of 1938 (the Democrats did not lose seats during the first Roosevelt mid-term election in 1934).  For those who have studied our an

Equity Only Put-Call Ratios

A rather large difference has developed between the two major equity-only put-call ratios.  In fact, when we look at many of the other broad-based index put-call ratios, we see similar differences.  So, what is actually taking place?  In this article, we’ll look at the components of these ratios to see if we can discern why this difference exists.  This isn’t the first time we’ve seen such differences.  One of the more notable occasions was near the bottom of the market in July-August 2002, at which time the equity-only ratios both gave premature b

Stock Market Commentary

The following Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

The major indices have run into resistance. For $SPX, this refers to the 1180-1220 area, which was the April top. If the ensuing correction is merely an overbought correction in an ongoing bull market, it should be limited to support in the 1130-1150 area.

On the other hand, a breakout over 1220 would be very bullish, but it just doesn't seem like the market has the energy for that kind of breakout at this time.

Stock Market Commentary

The following Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

The $SPX chart is bullish, as it continues to rise and stay above its 20-day moving average, which is now at about 1160. That is also Tuesday's low, so it represents the first level of support.

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