The pressure on the stock market increased again this week, driving the Standard & Poors 500 Index ($SPX) down through some support levels, and generally turning almost all of our indicators to sell signals.
The next support level for $SPX -- at 1600 -- is the extremely important one, and that held today. There is now resistance at 1625-1635.
Equity-only put-call ratios are strongly on sell signals. They are now trending upwards, which is bearish for the market.
Stocks sold off almost all day Wednesday. This did a lot of additional technical damage. Specifically, $SPX closed below the 1625-1635 support area and now that means the 1600 level is the next support. 1600 was a double top back in April, and when $SPX broke upward through there in early May, it set off the wild buying spree that carried the market straight upu to 1690. Thus it is quite important.
Since stocks started to stumble last week, volatility has increased and a number of indicators have begun to look more negative.
The chart of SPX is still bullish, though. This week's low was 1640, and that is the first support level. There is also support in the 1625-1635 area, as well as at the still-rising 20-day moving average (near 1635).
Equity-only put-call ratios have started to roll over to possible sell signals.
As a guest on CBOETV "In The Money" last week, Larry McMillan discussed hedging in the current market enviroment. Watch the interivew by Angela Miles below.
The stock market finally took a hit this week, but it hasn't really changed the overall picture -- yet.
First, as far as the chart of $SPX is concerned, it is still bullish. Yesterday's low at 1635 has to be considered a support level as well as 1625-1630, and then the more important support at 1600. if THAT were violated, it would be bearish.
Some wild action in the U.S. yesterday, coupled with a 7% decline (!!) in Japan overnight, has put traders on edge. Yesterday saw $SPX gain about 1% (up 18), then lose most of it, then gain about 10 again, and then just collapse, finishing 32 points off the high of the day. Overnight, after the debacle in Japan, S&P futures were as must as another 23 points lower, but at this writing, they are off about 14.
Stocks continue to rise almost daily. $SPX has gone on a tear since successfully testing support at 1540 about a month ago.(April 18th). This latest upside breakout now leaves the 1623 area as minor support.
Equity-only put-call ratios have plunged recently. That is caused by heavy call buying. Consider Figures 2 and 3: these 21-day moving averages rolled over to buy signals in late April, and they are overbought by the fact that they are at the lower regions of their charts.
Stocks had a small change to their regular pattern yesterday: they didn’t close at the day’s highs. However, they did open slightly lower and then rallied strongly into mid-day. After that there was modest selling, but a late rally kept most of the day’s gains intact. $SPX is now in a bit of a rarified situation.
The stock market continues to make new all-time highs for most of the major indices, including the Standard and Poors 500 Index ($SPX). The speed of the advance has accelerated in recent days, after minor resistance at $SPX 1600 was overcome.
1600 and 1550 are both strong support levels. There has been enough publicity about the 1600 support level that, if it were broken, some sharp accelerated selling would likely take place.
Individual indicators are bullish in their own right, but price (i.e., the chart of $SPX), is without a doubt the number one factor for consideration. There is support in the 1575-1580 range -- generally in the area of the lows of the past couple of weeks.
Equity-only put-call ratios are both on buy signals.
