By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — When the stock market, as measured by the Standard & Poor’s 500 Index, broke out over 1,220 about a month ago, it was a strong bullish signal. Most of the technical indicators agreed by registering intermediate-term buy signals as well.
By Lawrence G. McMillan
...As a result, not only is the $SPX trading range (1215-1230 on the downside, and 1275-1290 on the upside) still intact, but it is actually narrowing. There is a downward-sloping trendline overhead, and an upward-sloping trendline beneath. Something is going to have to give here – and soon. The fact that volatility remains high and put volume remains heavy should be a contrary, positive indicator, but as long as the market continues to react violently to these European news "bits," there will continue to be demand for protection.
By Lawrence G. McMillan
For the second week in a row, a rising market was blindsided by negative "macro" news out of Europe and suffered a violent downturn as a result. What has been quite astonishing is the speed with which the last two declines have occurred. When all is said and done, though, support at $SPX 1215-1220 is still in place.
The equity-only put-call ratios are clinging to their buy signals. Market breadth continues to swing wildly from day to day. Most recently, it is back on a buy signal.
By Lawrence G. McMillan
After the nasty decline early last week, the stock market pulled itself together and rallied. The Standard & Poor’s 500 Index bounced off the general area surrounding 1,220, and thus the selling that had occurred on Oct. 31 and Nov. 1 — severe as it was — merely looked like a quick retest of the 1,220 breakout level (see chart below). As the market then rallied back towards the 200-day moving average, the technical indicators began to strengthen to the point where all were on intermediate-term buy signals entering today.
By Lawrence G. McMillan
Yesterday was a strong day, backed by technical factors across the board. But forget about it, because tonight the market is getting absolutely crushed. S&P futures we down as much as 32 points, and are down about 26 right now. The problem? Italian interest rates are rising dramatically – particularly noticeable, apparently, on the 10-year notes. The media is saying that the Italian bonds yields are a "crisis levels," whatever that means.
By Lawrence G. McMillan
Velocity. That’s a term more commonly found in physics or aeronautical engineering or something like that, but stock market participants are becoming all too familiar with the word, even if they have no idea what v = Δx/Δt means. Volatility is a measure of the size of market movements, but velocity is just the raw directional speed with which they occur. After observing the market this week, I am more inclined to call what we are seeing as velocity, and not volatility.
By Lawrence G. McMillan
When the dust has settled, this looks like little more than a pullback from a slightly overbought condition to test the breakout level (at 1220). To sum up the $SPX chart: there is still support at 1220, and as long as that holds, it's a bullish chart.
Equity-only put-call ratios have remained on buy signals all week, despite the heavy selling earlier in the week.
Also, the breadth oscillators are back on buy signals once again.
By Lawrence G. McMillan
Monday and Tuesday had all the earmarks of panic selling, but it has shaken the confidence that had been gathered throughout the strong October rally.
By Lawrence G. McMillan
Yesterday had all the earmarks of panic selling, but it has shaken the confidence that had been gathered throughout the strong October rally. Once again, it seems that the majority of the major players are still acting in a like manner daily, so that these wilder-than-usual swings take place. $SPX sliced all the way down through the supposed support at 1220-1230, and traded as low as 1215.
By Lawrence G. McMillan
Today’s move saw $SPX blow right through the resistance at 1260 and also through the 200-day moving average at 1272. Those are both significant levels to have overcome. The market may have to spend some time around the 200-day moving average, as it often does when it passes through that level, but the next higher targets of 1310 and then the yearly highs at 1350-1370 should be within range fairly soon.
Equity-only put-call ratios remain on buy signals.
