Weekly Stock Market Commentary 12/11/15

By Lawrence G. McMillan

So far in December, we've seen volatile $SPX daily moves of +22, -23, -30, +42, followed by a 4-day decline of 75 points. There is resistance at 2100 (the late November peak) and support at and 2020 (the November lows).

Equity-only put-call ratios remain bearish, since they continue to rise. Their rise is faster now, since put buying has increased in intensity this week.

Market breadth has been weak, and both breadth oscillators are on sell signals. These indicators are oversold, though, which means that sharp, but short-lived rallies are possible at any time.

Volatility indices have been very volatile, as has the market. There is a very real possibility that $VIX is beginning to trend higher, and that would be a big negative for stocks.

In summary, the indicators are mixed, but are becoming more negative. A breakdown and close below 2020 would set off some sharp selling, but that might not occur. If the support holds until the position December seasonal patterns can take hold, the downside could be limited.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.