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Weekly Stock Market Commentary 12/2/2022

By Lawrence G. McMillan

The market continues the rally that began in early October. Yes, there have been some severe down days mixed in, but $SPX has generally been overcoming one resistance level after another and closing gaps left on the way down (most recently, the island reversal gaps from early September have been filled). This morning's strong job report has knocked the market down 50+ $SPX points, but that is not necessarily a rally killer. The most recent breakout above resistance at 4030 led $SPX to reach not only the downtrending 200-day Moving Average, but the downtrend line for this bear market. Both are near 4100. A strong move above 4100 would break that downtrend line, but it would not necessarily be the end of the bear market. The next resistance level above that is the August highs at 4325.

Introducing our new Options Mentor: Mark Esposito

By Lawrence G. McMillan

Stan Freifeld and I started McMillan Options Mentoring 17 years ago to train students how to trade options successfully while reducing the inherent risks. Earlier this year, Stan decided not to take on any additional mentoring students. He will continue to lead the program and provide hourly consulting services to our customers.

Option Prices as a Predictor of Underlying Price (08:17)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 8, No. 17 on September 9, 1999. 

As most of our subscribers know, we often use option premium levels as an aid in predicting what might happen to the underlying instrument – whether it be an index, a futures contract, or stock. The way that we normally speak about option premium levels is to refer to the implied volatility of the options. Implied volatility is really an attempt to determine how volatile the underlying will be during the life of the option. As implied volatility increases, so does time value premium – and hence the option price. So that an option with a very high implied volatility will be a very costly option, and it will have a great deal of time value premium.

Larry McMillan Stock Market Update Video 11/28/2022

By Lawrence G. McMillan

Join Larry McMillan as he discusses the current state of the stock market on November 28, 2022.

Weekly Stock Market Commentary 11/25/2022

By Lawrence G. McMillan

The stock market ($SPX), has continued to rally this week, so the bullish case gained some traction across a number of factors. The close above resistance at around 4000 was a positive step in terms of price and sets up a move to at least the 200-day moving average or the 4070-4100 area.

2022 Post-Thanksgiving Seasonal System

By Lawrence G. McMillan

There are actually three different positive (bullish) seasonal systems that occur between Thanksgiving and the start of the new year. In short, they are 1) the post-Thanksgiving rally, 2) the “January effect,” and 3) the “Santa Claus rally.” These encompass the entire period between the close of trading on the day before Thanksgiving through the second trading day of the new year. Moreover, small caps stocks (as measured by the Russell 2000 Index [$RUT, IWM]) normally outperform large-cap stocks over that time frame. We will describe the system below, but if you want more background, you might refer to the November 14, 2014, issue of TOS (Volume 23, No. 21), although there are other articles scattered over the years that discuss this system.

Larry McMillan Stock Market Update Video 11/21/2022

By Lawrence G. McMillan

Join Larry McMillan as he discusses the current state of the stock market on November 21, 2022.

Event Trading Using Butterflies, Straddles and Calendars (19:4)

By Lawrence G. McMillan

This article was originally published in The Option Strategist Newsletter Volume 19, No. 4 on February 25, 2010. 

We have recently recommended a couple of butterfly spreads involving earnings situations, while in the past we’ve used dual calendar spreads. In addition, we sometimes use straddle purchases for other events – such as FDA hearings. Butterflies and calendars are apropos for FDA events as well. In this article, we’re going to refine which strategy is best for which situation, for each has its own merits and deficiencies.

Larry McMillan Stock Market Update Video 11/14/2022

By Lawrence G. McMillan

Join Larry McMillan as he discusses the current state of the stock market on November 14th, 2022.

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