Blogs

Weekly Commentary 12/21/12 - $SPX $VIX

By Lawrence G. McMillan

I guess politicians don't understand that the end of the year is supposed to be a time of holiday celebration and little market movement. Amazingly, this sharp decline today may not actually change the technical picture much -- unless the decline gets worse.

$SPX closed Thursday at 1443.60, with the 20-day moving average at 1420.  The 1420 level is also a support level, extending back to October.

Meanwhile, the equity-only put-call charts continue to remain strongly on buy signals.

In focus: Bulls have the upper hand - $SPX $VIX

By Lawrence G. McMillan

The broad market, as measured by the Standard & Poor’s 500 Index has had a pretty good week. First, the 1,420 area was overcome, followed by a pullback to slightly below that level.

Stocks are overbought, however the bigger picture is bullish

By Lawrence G. McMillan

Stocks continue to work higher.  The main cause is the unwinding of previous pessimism (see put-call ratio charts, for example), although the media won’t believe that.  They are certain it all has to do with the fiscal cliff. Regardless, we are beginning to see overbought conditions again, and a short-lived pullback might be in order. However, with the holiday period approaching, it is unlikely that there will be much activity after tomorrow, for much of the remainder of this year.  

Playing Apple (AAPL) with options

By Ryan Brennan

As we all know, Apple (AAPL) is down roughly 25% since its high in September.  As one may expect, volatility has subsequently increased, resulting in various option trading opportunities.   AAPL recently gave a confirmed put-call ratio buy signal.  However one may be hesitant to "catch the falling knife" by purchasing the stock, or even going long calls outright.  Instead, he could set up a hedged position and trade the volatility.

Weekly Commentary 12/14/12

By Lawrence G. McMillan

The stock market, as measured by the S&P 500 Index ($SPX), moved higher over the past week, overcoming resistance at 1420 and then also at 1430.  However, since Fed Chairman Bernanke spoke on Wednesday, the market has pulled back.  So far this pullback has caused only minimal damage to the technical indicators, and it would be a relatively simple matter for the bulls to regain control.

Put-call ratios have been strongly bullish and remain so today.

However, market breadth indicators are turning bearish.

3x ETFs: Do they perform better than regular ETFs?

By Lawrence G. McMillan

At our most recent live seminar, in Las Vegas, a suggestion was made to analyze the performance of the “3 times” ETFs versus the regular underlying ETF.  Furthermore, what are the ramifications for option traders?  These questions – while simple on the surface – turned out to be rather complex.  So, to answer them is going to take more than one feature article.  This is the first of those.  At this time, we are going to look at the performance of the ETFs and lay out some general trading strategies.

About our Volatility Data - Implied Volatility - Historical Volatility

By Lawrence G. McMillan

One of most important things an option trader watches is volatility. The daily Volatility History report in The Strategy Zone offers you the data you need to be a well-prepared option trader: three historical volatility levels, plus implied volatility, and the percentile of implied volatility.

We are looking for this market to break out on the upside - $SPX

By Lawrence G. McMillan

The stock market edged higher yesterday, which keeps alive the prospects of an upside breakout in the near future.  Equity-only put-call ratios both made new relative lows on their charts, so that is quite bullish.  Recall also that the Total put-call ratio moved to a new buy signal at Friday’s close.  Breadth was especially positive in terms of “stocks only” data yesterday, and both breadth oscillators remain on buy signals.

Weekly Commentary 12/7/12

By Lawrence G. McMillan

The market has drifted into a dull, waiting state.  Despite what appeared to be upside breakouts last week, there was no follow- through.  In the end, it will most likely come down to $SPX price once again. In recent days, $SPX has been bounded roughly by resistance at 1420-1425 and by support at 1395-1400.  A breakout in either direction would likely create some momentum.

Equity-only put-call ratios have remained on buy signals.

Market breadth oscillators have deteriorated, but they still remain on buy signals (barely).

Which Option To Buy: Deciding What Contract Is Best

By Lawrence G. McMillan

There are various trading strategies -- some short-term, some long-term (even buy and hold).  If one decides to use an option to implement a trading strategy, the time horizon of the strategy itself often dictates the general category of option which should be bought -- in-the-money vs. out-of-the-money, near-term vs. long-term, etc.  This statement is true whether one is referring to stock, index, or futures options. 

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.