Volatility Crushed - Rare Signal On Watch

By Lawrence G. McMillan

...Volatility indices ($VXST, $VIX, and $VXV) literally collapsed yesterday.  They were down in the morning after Tuesday’s somewhat surprising strength, but on Wednesday afternoon, they were really crushed. Short-term vol ($VXST) was down 16.7%, while $VIX was down 12% – pretty big moves. This has several implications. The first is that our “bearish demarcation” line of 13 for $VIX was pretty good.

The Option Strategist Newsletter Volume 23, No. 11 Preview

By Lawrence G. McMillan

The feature article discusses ways in which the market is “overbought,” from time spent above the 200-day moving average, to the time since a 10% correction has occurred, to the low state of the volatility indices. In essence, though, these are not sell signals, for the market can continue to rally even while it is overbought.

Weekly Stock Market Commentary 6/13/14

By Lawrence G. McMillan

As far as the $SPX chart is concerned, it has support at 1900. In fact, there is really support all the way down to 1860. A close below 1860 would change things, turning the chart to a bearish state if that were to happen.

Equity-only put-call ratios remain on buy signals. The standard ratio (chart, Figure 2) finally got in synch with the weighted ratio and issued a buy signal a couple of weeks ago.

Just How “Stretched” Is The Market?

By Lawrence G. McMillan

There are many ways that analysts have been disseminating statistics that show the current market environment is at historic levels, not only in terms of price, but in terms of the length of time it’s gone without corrections of various magnitudes.  

The Market is Tired and Overbought, But Still Bullish

By Lawrence G. McMillan

The market is tired and overbought, but even so it managed to claw its was back yesterday afternoon, reducing the losses to mere fractions. As a result, the indicators closed in their previous bullish states. However, today there is some selling. Ostensibly this is because of a negative World Bank growth forecast. But in reality, plenty of people see the overbought condition and are looking for an excuse to sell. We would rather wait for actual sell signals.

Weekly Stock Market Commentary 6/6/14

By Lawrence G. McMillan

If there were any doubts about the validity of the breakout to new all- time highs, they should be satisfied by now. $SPX has support at 1900, and then all the way down to 1860.

The equity-only put-call ratios remain on buy signals. The standard ratio had been lagging, but finally moved into the bullish column last week, joining the weighted ratio.

Market breadth was on the verge of sell signals this week, but they did not occur. So, both breadth oscillators remain on buy signals.

Four Eye-Opening Facts About Naked Put Selling

Ryan Brennan

Do You Sell Naked Puts? If not, you may want to consider doing so. People often stay away from unocovered put writing because they hear that it is "too risky" or that it doesn't have a sufficient risk-reward. The truth is that put-selling, when secured by cash, is actually less risky than owning stock outright and can out-perform the broad market over time. The following article debunks myths surrounding put-writing and explains some of the benefits of this simple-yet-effective strategy.

Stan’s Option Challenge: Question #7

We all know that trading options is exciting, highly competitive, and can be very profitable. The key to long term and consistent profits in option trading is options education. The McMillan Mentoring Program, which is run by former Market Maker, white badge AMEX Floor Official, professional trader, and longtime MENSA member Stan Freifeld, can take your trading to the next level.

Weekly Stock Market Commentary 5/30/14

By Lawrence G. McMillan

The broad market, as measured by the Standard & Poors 500 Index ($SPX) and other indices, has broken out to new all-time highs again. This time, the breakout quickly extended with a strong second day, and today added even more distance. This has turned the $SPX chart bullish.

The Option Strategist Newsletter Volume 23, No. 09-10 Preview

By Lawrence G. McMillan

This is the only issue to be published in May, and it is a “double issue.”  The reason for this change in the publication schedule was an extensive travel schedule from April 30th through May 15th.  While not technically twice the length, there are twice the number of articles.

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.
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