fbpx Weekly Stock Market Commentary 11/10/17 | Option Strategist
Home » Blog » 2017 » 11 » Weekly Stock Market Commentary 11/10/17
By Lawrence G. McMillan

Yesterday's action was the first time in quite a while that the market has reacted to negative news. An overbought $SPX sold off nearly 30 points on news that the Senate is going to delay a corporate tax cut bill until 2019. But then the bulls came to the rescue once again, regaining about two-thirds of the losses in a positive intraday reversal. Not only does that still prove that the $SPX chart is positive, but it also establishes a support area at roughly 2565 -- the place where both last week and this week intraday selling halted, and a strong intraday upward reversal began.

Equity-only put-call ratio charts have become mixed. The weighted ratio remains on a sell signal, but the standard ratio (Figure 2) has rolled back over to a buy signal.

Market breadth is not mixed. It is negative. There has been a distinct lack of positive breadth on this most recent rally, and so both breadth oscillators have remained on sell signals since late October.

Volatility indices remain low and thus in a benign spot for stocks. Stocks can continue to rise, even though $VIX is extremely overbought (at or below 10).

In summary, until $SPX breaks support or $VIX breaks out to the upside, the intermediate-term outlook will remain positive. Other sell signals and overbought conditions give compelling arguments for a short-term pullback, which has had trouble materializing, but whose probabilities are still high.

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

The Option Strategist Newsletter $29 trial