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Weekly Commentary 9/16/2011

By Lawrence G. McMillan

For now, $SPX is working its way higher -- towards resistance at the 1240-1260 level.

Equity-only put-call ratios generated buy signals recently, and have generally been declining (bullish) ever since.

Breadth indicators are on buy signals, too.  They have reached modestly overbought levels now, after having been deeply oversold a week ago.

The Volatility of Volatility and other concerns for $VIX buyers

By Lawrence G. McMillan

One of the reasons that we favor $VIX derivatives as a portfolio, hedge rather than $SPX (or SPY) puts, is that $VIX is much more volatile.  Also, $VIX protection is more dynamic.  However, there can be some problems with the timing of a market’s breakdown and the convergence of $VIX derivatives with $VIX.  In this article, we’re going to look at the details behind these actions, so that those who buy $VIX derivatives for speculation or protection might better understand what the potential problems are.

In focus: Reprieve

By Lawrence G. McMillan

The stock market remains volatile, but it has generally been rising since establishing lows near 1,120 on the Standard & Poor’s 500 Index nearly a month ago. The rise certainly hasn’t been uniform, though.

A move below $SPX 1140 would be very negative

By Lawrence G. McMillan

Today’s stock market action is very much like last Friday’s.  There is heavy selling, and it doesn’t appear that buyers have much desire to buy before the weekend.  Last week, there was a rally attempt at 3pm (Eastern time), but it eventually failed, and prices closed on the low of the day.  If you’ll recall, last week the selling continued on into the afternoon of the first trading day of the next week, before a strong rally surfaced.  That could well be the case again this week.

Weekly Commentary 9/9/2011

By Lawrence G. McMillan

The chart of $SPX has developed a very interesting characteristic: there is a rising channel -- called a "pennant"  on the chart.  A breakdown below the lower boundary of the channel creates a very negative technical formation.      

Equity-only put-call ratios, meanwhile, are quite bullish.  They rolled over to buy signals last week and continue to decline.      

Still volatile and dangerous

By Lawrence G. McMillan

The stock market has been swinging back and forth in wide ranges, moving from deeply oversold to deeply overbought and back again with extreme moves.

The bulls have regained the upper hand...for now

By Lawrence G. McMillan

Buyers finally emerged yesterday afternoon and they have continued into today.  In my mind, the complete impetus for this rally was the severe oversold condition that had emerged over the previous three days of heavy selling.  Today’s rally is on track to being a “90% up day” – certainly in terms of “stocks only” data and potentially in terms of NYSE-based data as well.  At the current time, on the NYSE, advancing volume is 12-to-1 over declining volume.

Positive Book Review at Seeking Alpha

Larry's new book, Options For Volatile Markets, received a positive review by Brenda Jubin at Seeking Alpha.  Jubin Writes:

Weekly Commentary 9/2/2011

By Lawrence G. McMillan

Technical indicators have turned more bullish in the past week, so the current rally probably has more room to run.  The chart of $SPX has taken on a slightly more bullish tone. This week $SPX overcame resistance at 1200-1210, although it has now fallen back below that level.  

There is also resistance at 1230 -- the intraday high of both the last two trading days.      

More buy signals in place: Look for short-term correction before the next advance

By Lawrence G. McMillan

MORRISTOWN, N.J. (MarketWatch) — After Federal Reserve Chairman Ben Bernanke’s speech last Friday, the market sold off rather sharply. But once that selling got out of the way, a strong bullish move took place, carrying the Standard & Poor’s 500 Index higher by more than 70 points in just over one full trading day.


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