Weekly Stock Market Commentary 6/16/17

By Lawrence G. McMillan

It seems that no matter how strongly the market seems to sell off early in the day, it recovers almost all of those losses by the end of the day. As a result, the $SPX chart remains bullish. Subscribers know that we place a great deal of importance on the $SPX chart's trend, and as long as $SPX holds above support, the outlook for the overall market remains intermediate-term bullish.

Equity-only put-call ratios are probably our most negative indicator. Both ratios have been on the rise since early June and both are on confirmed sell signals -- confirmed by the naked eye as well as the computer analysis programs.

Weekly Stock Market Commentary 6/9/17

By Lawrence G. McMillan

A week ago, on Thursday, $SPX had broken out strongly to a new all-time high. It followed up with a modestly positive day the next day. On both days, "stocks only" cumulative breadth made new all-time highs as well, confirming the breakout.

However, since then, $SPX has traded in a very small and tight range for four consecutive days. A mere 15-point range has contained all four days' worth of trading. While this is annoying, it doesn't change the fact that the $SPX chart is bullish as long as $SPX continues to close above 2400.

Equity-only put-call ratios have curled slightly upward, but for now they remain bullish, albeit quite overbought.

Weekly Stock Market Commentary 6/2/17

By Lawrence G. McMillan

The market has roared to new all-time highs. This brute force market strength belies sell signals and a certain amount of general negativity in many of the other indicators. But it doesn't really seem to matter, as $SPX remains the strongest and, by definition, the most important indicator.

For the record, there is support at 2400 (this week's lows) and roughly 2350 (the lows of the big down day two weeks ago). An upside target of 2480 is in play, from the width of the previous trading range.

Weekly Stock Market Commentary 5/26/17

By Lawrence G. McMillan

We have repeatedly stated over the years that the S&P 500 index ($SPX) itself is the most important indicator, because even if all the other indicators are saying one thing, but $SPX is not confirming, then $SPX is right.

At the current time, $SPX is breaking out in a bullish manner, but the other indicators -- for the most part -- are not in agreement. Can $SPX carry the weight all by itself? Yes, because anything is possible, but that's not the ideal situation.

Equity-only put-call ratios are in an overbought state. The weighted ratio is at multi-year lows and on the cusp of a sell signal. The standard ratio is overbought, but not yet on a sell signal.

Long-term Weighted Put-Call Ratio Chart

By Lawrence G. McMillan

Reference was made in Friday's Weekly Commentary to the fact that the weighted put-call ratio is at its lowest levels since November 2014.  The long-term weighted put-call ratio chart – dating back to 1998 – is shown in Figure 5.   In the 2002 bear market, the readings were astronomical, but since then, the ratio has ranged roughly from 50 to 130, except for some very bearish markets.  The lows have slowly crept higher over the years, which is understandable, as more people have come to rely on put buying as a routine “insurance policy.”  

Weekly Stock Market Commentary 5/19/17

By Lawrence G. McMillan

Stocks finally suffered a breakdown of sorts this week, after some extremely overbought conditions -- particularly in volatility -- had appeared. But the bulls are trying mightily to contain the damage, and they look they're doing it quickly.

At this point, $SPX remains within the trading range that was delineated by the March highs and lows (2322 - 2401). Very little damage has been done to the $SPX chart. It remains in a neutral state.

Equity-only put-call ratios remain at low levels on their chart, meaning they are in an overbought state. Actually, the weighted ratio (Figure 3) has begun to curl upward, and the computer analysis programs that we use are now saying this is a "sell."

Weekly Stock Market Commentary 5/12/17

By Lawrence G. McMillan

For some time, we have been waiting to see if $SPX can break out on the upside. A breakout has not occurred, despite marginal new all-time closing highs (by pennies) for $SPX.

In reality, $SPX remains trapped within not one, but two trading ranges. The first range is the larger one -- comprised essentially of the March highs and lows, 2322 to 2401. Within that range, there is an even tighter range at play: 2380 to 2400. Because of these trading ranges, the $SPX chart is neutral.

New European Volatility Products (EVIX) (EXIV)

By Lawrence G. McMillan

In a move which some might call a “day late and a dollar short,” there are now going to be some products via which European volatility can be traded in the U.S. markets.  There have long been volatility futures on the “European $VIX” – VSTOXX.  VSTOXX measures the implied volatility of the European EURO STOXX 50 Index, using the same methodology that $VIX does. 

Janus has listed two ETN’s which are volatility ETN’s on the VSTOXX.  EVIX is the forward (normal) Volatility Index, and EXIV is the reverse.  These are akin to VXX and XIV, respectively.  At this time, there is no “double $VSTOXX” ETN listed in the U.S. (i.e., nothing akin to TVIX or UVXY). 

Weekly Stock Market Commentary 5/5/17

By Lawrence G. McMillan

As you certainly recall, after "Frexit," $SPX broke out strongly to the upside gapping up on two consecutive days (something that is quite unusual for a large-cap index). However, since then it has virtually gone nowhere. As $SPX has hunkered down in this tight band, some technical deterioration has appeared.

The equity-only put-call ratios have diverged over the last week or so. The weighted ratio (Figure 3) continues to decline and thus remains on a buy signal, but the standard ratio (Figure 2) is on a sell.

Weekly Stock Market Commentary 4/28/2017

By Lawrence G. McMillan

The stock market had a very favorable reaction to the French election. From a technical analysis standpoint, the move also brought in buyers, since $SPX broke upwards out of the pennant that had formed on its chart (red lines in Figure 1). But $SPX has not made new all-time highs, despite many of the small-cap indicies doing so. A cynic might say that $SPX is still in a trading range between 2322 and 2401 until proven otherwise.

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