By Lawrence G. McMillan
The feature article this week lays out three of the seasonal patterns that we trade or observe in October and November. More will follow later in the year, and they will be the subject of another article at that time. The October Seasonal trade won’t be operative this year unless there is a larger pullback than the modest one we had last week.
Our market opinion has shifted somewhat with the violent rally of Thursday. Prior to that, oversold conditions were in place, so that was partly responsible for the rally. We want to see $SPX break out over resistance before actually taking bullish positions (page 6).
On page 7, there is a detailed article on $VIX spike peak buy signals (one of which occurred at Thursday’s close), in light of low large an $SPX move occurred on the day of the signal. If the move is too big, the ensuing signal is not that profitable, usually.
On page 9, there are several recommendations: naked put sales in WDC and RRD, an event-driven straddle in MDVN, and an earnings-based strategy in SNDK.
There is a contingent put-call ratio signal in WFC (page 10), and a hedged $VIX spread on page 12.
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