Short-Term Sell Signals Have Been Registered

By Lawrence G. McMillan

And so it begins.  Sell signals have been registered, and it is possible that more will follow. $SPX closed off nearly 10 points yesterday, as attempts to rally all afternoon eventually failed, and the index closed near its lows.  S&P futures have traded another 5 points lower overnight.  This activated the “modified Bollinger Band” sell signal.  There really isn’t a target for this system, as we defined it (although we are going to explore it a bit further in this week’s edition of The Option Strategist newsletter), but the signals often reach the opposite extreme.  For example, the mBB buy signal that occurred on Feb 6 at $SPX 1773.40 eventually reached the upper 4-sigma Band on March 4th, at $SPX 1873.9.  Currently, the lower 4-sigma Band is at 1810, although it will move lower if $SPX declines that far.

The equity-only put-call ratios moved higher after yesterday’s selling.  Somewhat surprisingly, the computer program that we use to analyze these chart now grades the weighted ratio as a “sell.”   The standard ratio remains on a buy signal...

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