Join McMillan Analysis Corp. president, Lawrence G. McMillan, as he discusses the current state of our option-oriented indicators and what they are saying about the stock market.
Stocks have continued to rally, for the most part, although the rally was beginning to break down a bit technically until a positive news report about an antiviral for the coronavirus sickness spurred an 80- point rally in S&P futures overnight.
We continue to feel that the 2850-2900 range on $SPX represents some resistance. There is more or less resistance all the way up to the next significant level, at 3010 (which is also where the 200-day moving average is).
This article was originally published in The Option Strategist Newsletter Volume 17, No. 13 on July 11, 2008.
The decision to set up a hedge to protect one’s stock portfolio is never an easy one. When times are good and stocks are rising, investors are loathe to spend the money required to hedge their positions. When times are bad, and the market is dropping, the cost of hedging increases. However, that fact is usually understood by investors, who might not mind paying a little more for insurance once it is obvious that stocks are no longer rising, in general. However, another impediment to hedging usually surfaces at that time: an investor fears that he has waited too long, and thus doesn’t want to buy insurance right at the bottom of the market’s decline.
The oversold rally that began with an intraday reversal on March 20th has regained steam and has risen above the 20-day Moving Average, as is typucal for an oversold rally.
For the record, there is resistance in the 2850-2900 area, even though support and resistance have meant much to this fast-moving market.
Equity-only put-call ratios are on buy signals. The current buy signals occurred right near the lows, on March 23rd and will remain in effect as long as the ratios are declining.
The oversold rally that was underway last week ran out of steam as soon as it ran into the declining 20-day moving average of $SPX. There is now resistance at 2650. The 2175-2190 level still qualifies as support, and it has not been tested at all.
The equity-only put-call ratios remain on buy signals, despite the fact that they have curled up ovhe past few days. These buy signals would be canceled if the ratios rise to new highs.
This article was originally published in The Option Strategist Newsletter Volume 18, No. 4-5 on March 5, 2009.
I’m a numbers guy – degrees in math and all that – so I get a lot out of looking at charts, tables, and so forth that show past market behavior. That also makes me a technician. But it always amazes me how people can look at the same set of data and come away with very different conclusions.
We are currently, in March 2020, in one of the three most volatile markets in history. In terms of absolute price change, it has no peers. In terms of percentage price change, 1929, 1931-1933, and 1987 are all in the mix (but not 2008, which has been surpassed). If we looked back even farther, there would be other markets which were volatile, too (1907, for example), but in this paper we are not looking back past 1928.