By Lawrence G. McMillan
The stock market is once again overbought, and we have done more research into what we hope will be effective systems for taking advantage of these conditions. Most of the article is devoted to creating a trading system around the “modified Bollinger Bands,” but market breadth and volatility are “overbought,” too. A recommendation is made on page 4.
The market commentary is on page 6. Our intermediate-term indicators are bullish, but the overbought conditions indicate that a sharp, but short-lived correction is due soon.
We are not going to trade the October Seasonal pattern this year, because there was no meaningful decline is $SPX during October (page 7).
On page 9, there are three recommendations: a GLD position, an EXPE earnings-related diagonal spread, and a trade in the Soybean mini-futures.
$VIX futures are going to expand their trading hours by a significant amount (article, page 12).
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