Blogs

Weekly Stock Market Commentary 1/13/17

By Lawrence G. McMillan

The stock market has split into two parts recently. Most of the major averages are moving sideways, but staying within easy range of new all-time highs. The NASDAQ Composite, however, and its smaller companion the NASDAQ-100 ($NDX) have been making new all-time highs frequently. This should be a good thing.

The $SPX chart remains bullish in that its trend lines are sloping upwards and support has held. There is support at 2233, and then at 2210 and 2190 below that.

A bearish development has taken place in the equity-only put- call ratios, as both have rolled over to confirmed sell signals. Market breadth continues to bounce back and forth.

Both Put-Call Ratio Signals Now on Sell Signals

By Lawrence G. McMillan

There was finally a little volatility yesterday, as President-elect Trump’s news conference halted a rally dead in its tracks. There were two resulting selloffs, but by the end of the day, $SPX had recovered and closed on its highs. It now once again stands less than two points from new all-time highs. Meanwhile, the NASDAQ Composite and its smaller companion $NDX made new all-time highs once again. Since the election, the NASDAQ Composite has made new all-time highs on 13 different days – including the last five days in a row! This is clearly where the market’s strength is at this time. Overnight, $SPX futures have been on the defensive all night and are now down about 9 points from yesterday’s close.

The January Barometer (Preview)

By Lawrence G. McMillan

The media confuses the various seasonal trading patterns that occur in January, but the January Barometer states that “As goes January, so goes the year.”  This adage is about to be tested again this year.

The January Barometer  had a long, successful track record for many years (using the $SPX index as “the market”).  According to the Stock Trader’s Almanac (www.stocktradersalmanac.com), the Barometer – which was devised by Yale Hirsch in 1972 – has had only 8 “significant” errors in 66 years.  The Catch 22 here might be the word “significant.”

From my point of view, it has failed for the last three years...

Weekly Stock Market Commentary 1/6/17

By Lawrence G. McMillan

Overall, the $SPX chart -- which is, by definition, the most important indicator -- remains positive. $SPX did have a pullback at year's end. The subsequent rally off of the 20-day moving average leaves support at 2233 (last Friday's lows). Below that, there is support at 2210 and 2190 (all marked on the chart in Figure 1).

The equity-only put-call ratios have pushed lower as the rally has continued. That means they remain on buy signals.

Market breadth continues to be the most volatile indicator, flopping back and forth with the short-term movements of $SPX. Most recently, breadth was strong enough to cancel out the previous sell signals and return both breadth oscillators to "buy."

VMIN: An ETF With Short Exposure To $VIX

By Lawrence G. McMillan

This week, the OCC sent out a notification that VMIN was going to split 2-for-1.  Because the symbol seemed like something related to volatility, I checked into it.  What I found was an ETF that looked potentially interesting, and that had been listed last May.  For some reason, I had never heard of it, so I decided to check it out.

Weekly Stock Market Commentary 12/30/16

By Lawrence G. McMillan

The final analysis on the $SPX chart is that it is still rising, with rising trend lines, and that means that it is still bullish. In the more traditional sense, there is support on the $SPX chart at 2210 and 2090.

The equity-only put-call charts remain on buy signals. The standard ratio (Figure 2) has continued to decline without much interruption since the last buy signal in early December. It is still not all the way to the lowest levels on its chart, so it is not severely overbought. The weighted ratio, on the other hand, is overbought, as it has been bumping around at very low levels.

Spotting Market Tops: An Update (Preview)

By Lawrence G. McMillan

We first published an in-depth article on this subject at the end of July, 2016. Since that time, the market has mostly gone higher, and no significant top has formed. Since the U.S. election, especially, the market has rallied strongly. Now, having reached an overbought state, some sell signals are beginning to appear. This is a review of current conditions vis-a-vis the four major tops that were discussed in the previous article.

Weekly Stock Market Commentary 12/23/16

By Lawrence G. McMillan

First and foremost, it must be noted that the chart of $SPX is still in an uptrend. The 20-day moving average is rising, and no major trend lines have been broken. $SPX has rallied so hard and so fast since the election that it is quite a ways above support, which is 2210 and 2190. As long as that support holds, the chart of $SPX will arguably still be in an uptrend.

Signs Of A Top Are Beginning To Appear

By Lawrence G. McMillan

Last July 29th, we wrote an in-depth article on “Spotting Market Tops.” The things that we talked about in that article are beginning to happen. No one has been more “on board” with this post-election rally than we have, as a number of seasonal and oversold conditions combined to produce good buy signals. But now the signs of a top are beginning to appear, and we do not want to be caught unaware. We will publish a blog this week with some specific updates on how what’s happening now fits (or doesn’t fit) the pattern of past tops. 

Seasonality Is Bullish? What Could Possibly Go Wrong?

By Lawrence G. McMillan

While we’re on the subject of seasonality, let’s review what happened over the past two years, because the seasonality did not remain bullish throughout the “usual” period.  The “usual” period is that the market rises from the day before Thanksgiving through the second trading day of the next year.  There are really three seasonal patterns that comprise that entire time frame: a) the post-Thanksgiving bullishness, b) the “January effect,” which now takes place in December and has for many years, and c) the “Santa Claus rally.”  

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.