The fall of the year is ripe with seasonal patterns not only for stocks, but also for Heating Oil and Gasoline. While we did not trade the October Bullish Seasonal pattern this year it was still modestly profitable. Now we have to look forward to some others that are on the very near-term horizon. These are not the ones related to Christmas and the new year – those are often more vague and less profitable to trade.
The strong bull run that took place throughout October and into early November is over. The break of support at 2070 was negative for $SPX. It could trade down to the 2000-2020 area in the short term.
Equity-only put-call ratios have remained on buy signals, even as $SPX has begun to falter. This perhaps indicates that the current decline is just a minor correction, and not something of a more intermediate-term nature.
In the US, tomorrow, Wednesday November 11th, is Veteran’s Day. While the stock and options markets WILL be open for trading, it is NOT a settlement day. When you buy or sell securities, “settlement” marks the official transfer from the seller to the buyer of the securities and the day when the buyer must pay the seller.
McMillan Options Mentoring Senior Option Mentor, Stan Freifeld recently gave a complimentary educational webinar detailing how to profit with delta neutral option positions. The recording of the presentation is now available to the public for free. The webinar description and video below are below. For more information on one-on-one options mentoring, visit the McMillan Option Mentoring information page.
The stock market's strong rally has continued for another week, although it's beginning to act a bit tired, and the market is getting overbought. Even so, the $SPX chart is still in an uptrend, and there is support at 2040, 2020 and 2000.
Equity-only put-call ratios continue to plunge, and that is bullish for stocks. These ratios are now in the lower portion of their charts, which is just on the verge of being overbought.
The stock market, as measured by the Standard & Poors 500 Index ($SPX), has gained 220 points in a month (since the September 28th lows). After such a strong advance in so short of a time, one would have to say that the market is overbought. Even so, actual sell signals have been hard to come by.
The $SPX chart itself remains bullish in that it is in a pattern of higher highs and higher lows, and the 20-day moving average is rising.
Note that there are three weeks between newsletters, since there are five Thursdays in October. The next issue will be published on Thursday, November 12th, and of course there will be Hotline updates for the intervening weeks.
Everyone knows that stocks can gap by huge amounts on earnings reports. Who in their right mind would want to sell such straddles? We touched on this subject in the last issue, but have since had time to complete a more rigorous study. It turns out that, at times, these straddles can be sold.
Earlier this week, it appeared that the rally that began at the end of October was lagging. But then Thursday, the market blew through resistance at 2040 and reaffirmed the bullish case with authority. A violation of the 1990 would remove the "bullish" label from the $SPX chart.
Equity-only put-call ratios remain on buy signals, as they continue to decline (Figures 2 and 3).
The stock market has taken on a much more bullish tone since the late- September lows. We had several buy signals on September 30th, and they were well-timed. The bullish case is still strong, even after $SPX has advanced 150 points this month.