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.
The trend of the $SPX chart is clearly bullish: higher highs and higher lows, with all significant moving averages trending upward. There should now be some support near 3150, which was a minor double top prior to the latest move to new highs. Below that, the December lows at 3070 provide stronger support.
Equity-only put-call ratios are arguably our most bearish indicators at the moment. Both are on sell signals now.