The Indicators Are Changing

By Lawrence G. McMillan

Stocks staged an extremely strong rally yesterday, and S&P futures are up another 15 points in overnight trading.  This whipsaw action has left traders and investors alike unsure of what comes next.  But the rally improved things greatly from a short-term perspective, and may have had some effect on the intermediate-term as well.

The chart of $SPX is still negative, though, because $SPX is still below resistance at 2040. $SPX is opening above 2040 this morning.  A clear close above 2040 would go a long ways toward removing that “negative” label from the $SPX chart.  As noted above, a “modified Bollinger Band” (mBB) buy signal occurred yesterday, and that is an intermediate-term buy signal.  The last two such signals (August 2015 and January 2016) saw the lows retested, though, before higher prices eventually prevailed.

Equity-only put-call ratios remain on sell signals, because there was still plenty of put buying yesterday.  The Total put-call ratio edged higher, too, but its 21-day Moving Average still remains below 0.90, so the recent Total put-call ratio buy signal is still in effect...

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