Blogs

Breadth Divergence: A Wake-Up Call

By Lawrence G. McMillan

...As strong as breadth has been, “stocks only” cumulative breadth has not yet made a new all-time high.  Its all-time high was made in April 2015, and really even that wasn’t much of a new high.  The last time that “stocks only” cumulative breadth moved strongly to a new high was in July 2014.  I say the April 2015 high “wasn’t much of a new high” because it only exceeded the July 2014 high by about 1,900 issues – one strong up day in the market.  This failure of the “stocks only” cumulative breadth to make new highs remains a major negative divergence for the stock market.

Option Basics: LEAPS As A Stock Substitute (4:22)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 4, No. 12 on June 21, 1995.

With the market being so high, many individual investors and institutional money managers as well are wondering what to do with these profits. Completely exiting the market is not a viable alternative for many, and is prohibited by charter for some institutions. However, there is a way in which one can reduce his downside exposure while still retaining upside profit potential — he can sell his stock and replace it with LEAPS call options.

Larry McMillan Free Webinar Tomorrow

McMillan Analysis Corp. president Lawrence G. McMillan will be participating in Investor Inspiration's Investor Masterminds seminar on August 4th, 2016. Larry's presentation will be on The Current State of Option-Oriented Indicators and begins at 1:45 pm Eastern Time.

Register for the all-day event including Larry's presentation by clicking here

Are Traders Too Complacent? (14:05)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 14, No. 5 on March 10, 2005.

One of the recurring themes in option-oriented media articles is that the $VIX Index is “too low.” Since many observers – media and traders alike – view $VIX as solely a contrarian indicator, this is a danger sign for the market. These observers figure that such a low $VIX implies that traders are, in general, too complacent, and thus the market is ripe for a beating. There are a lot of errors in these observations and opinions, and so we’d like to set the record straight. We have written articles about similar topics in the past, but with $VIX hovering near nineyear lows for such a long time (at least three months now), it is perhaps more timely now than ever.

Spotting Market Tops (Preview)

By Lawrence G. McMillan

Without a doubt, the hardest thing to do in the stock market is to spot a major market top before it happens.  Bottoms are much easier to discern.  One reason for this is that bottoms tend to be “V” or “W” affairs, with sharp downward spikes and sharp recoveries, but tops are “rolling” things that can take what seems like forever to complete.

Weekly Stock Market Commentary 7/29/16

By Lawrence G. McMillan

The broad stock market, as measured by $SPX, is locked in a very tight range -- and has been since new all-time highs were reached on July 14th. Overall, though, $SPX remains in a strong uptrend, with support at 2160.

Equity-only put-call ratios remain on buy signals, as they continue to move lower on their charts. They are now reaching the lows of 2015.

Market breadth has been in a confusing, back-and-forth pattern. Every day from July 12th through July 27th, breadth alternated between plus and minus. The breadth oscillators remain on buy signals, and they remain in overbought territory.

Stan Freifeld discusses Vertical Spreads at OIC (Video)

McMillan Option Mentoring head mentor, Stan Freifeld, recently joined the Options Industry Council panel for a webinar discussing Directional Trading with Spreads. To watch a video of the seminar, click here and you will be taken to the ON24 registration page. Enter your information and the presentation will begin.

Enjoy!

$VIX Futures As A Predictive Tool (18:06)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 18, No. 06 on March 26, 2009.

We have written about this topic many times in the past, but the $VIX futures’ ability to predict broad market movements has been called into question recently. For example, at the recent CBOE Risk Management Conference in Laguna Niguel, California, there was some discussion that the $VIX derivative products had lost their ability to “predict” movements in $SPX. That is not entirely true. What has spurred this sort of thinking is the fact that $VIX did not spike up to a peak and snap back down again when $SPX most recently declined sharply into what is so far a “V” bottom at 670. Also, discrepancies in the term structure, which at one time resulted in immediate movements in $SPX, have taken much longer to materialize in recent months than they used to.

Option Basics: Portfolio Insurance (5:2)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 5, No. 2 on January 25, 1996.

It's been almost a year since we addressed this topic. If this article is the springboard for a market like we had last year, then you won't need portfolio insurance. However, it never hurts to know about it, especially with the market being at such lofty levels, and many investors sitting on large unrealized gains in their stock portfolios.

Another Bullish Long-Term Indicator (Preview)

By Lawrence G. McMillan

Early this year, we noted that some longer-term indicators had given bullish signals.  One was when $SPX advanced by more than 1% for three consecutive days.  That occurred in early March.  Another bullish sign was when $SPX remained above its 20-day moving average for at least 30 days.  That occurred during March as well.  In both of those cases, the short-term gains were “meh,” but the longer-term ramifications (one year out, say) were quite positive.  

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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