Weekly put option sales have been added to the analyses in The Strategy Zone (SZ) and in the Option Work Bench (OWB).
Subscribers to The Daily Strategist that follow our weekly SPY sales, are up +18% in five months, in the ongoing position that we are running in that newsletter.
By Lawrence G. McMillan
Oversold conditions had built up over the past couple of weeks, and they finally spurred a decent rally -- mostly all in one day this week (Tuesday).
The chart of $SPX itself remains in a bearish downtrend, with the series of lower highs and lower lows.
Equity-only put-call ratios raced higher over the past two weeks, reaching oversold status as the market continued to decline. Then, when the rally unfolded, the standard ratio rolled over to a buy signal, while the weighted ratio topped out as well.
By Lawrence G. McMillan
After some major oversold conditions developed, the stock market managed two tepid rally days and then one strong one. That brought the Standard & Poor’s 500 Index back up to its declining 20-day moving average, which is usually about the full extent of an oversold rally.
By Lawrence G. McMillan
After a shaky overnight session, when S&P futures traded down 10 points at one time, and some opening jitters today (when $VIX traded above 23), the market has settled down and rallied. The rally is another one of those weak, rather pathetic affairs, but that apparently is all that the oversold conditions can generate at this time.
We continue to see the intermediate-term indicators in a negative state, while short-term oversold conditions increase.
By Lawrence G. McMillan
The market has had a rough week as the dominant bearish traits of this market have emerged. A couple of oversold rallies have been attempted, but they have been unusually weak. The chart of $SPX is in a downtrend and that is the major trademark of this market.
The equity-only put-call ratios are both on sell signals. They are continuing to rise rapidly, and thus might be considered oversold, but they will be bearish until they roll over and begin to trend downward.
By Lawrence G. McMillan
Yesterday’s rally has quickly been forgotten, as the market has cascaded downward today in a series of three large drops. This is further evidence of the fact that the primary trend is down. In fact, considering the hype behind yesterday’s oversold rally, it is actually an even more negative sign that it was obliterated so quickly. The chart of $SPX is in a downtrend, and that is the most important thing. $SPX is once again nearly 3 standard deviations below its 20-day moving average (an oversold condition).
By Lawrence G. McMillan
For the first time in quite a while, the bulls seem to have no power. Rallies are weak and quickly fade to new lows. Oversold conditions that, in the recent past, would have generated strong reflex rallies are having no effect at all. So the overall picture is bearish, but those oversold conditions continue to build along with some other buy signals, and so are worth noting as well.
By Lawrence G. McMillan
Tuesday's market action was extremely negative. A rally attempt stalled out in the afternoon, and that was bad enough considering the amount of oversold conditions that existed. But then the entire rally was erased in late-day trading, and S&P futures have continued on down another 6 points in Globex trading tonight. There is really no way to put lipstick on that pig. It was just plain ugly.
By Lawrence G. McMillan
$VIX spiked up to almost 20 last Friday and then reversed back downward to nearly 17. Currently, it stands at 17.82. A spike peak reversal of that magnitude is at least a short-term buy signal for the stock market. $VIX has probed to or above the 19 level four previous times since mid-April, and a tradable stock market rally has followed each time. Will this be the case again this time, considering that there are other, more negative, indicators at work as well?
By Lawrence G. McMillan
There seems to be a bit of a hangover from Friday’s action. Despite some potentially positive movement in $VIX, the market can’t seem to rally today. $VIX spiked up to nearly 20 on Friday and then fell back to almost 17. A reversal of that size is a positive factor for the stock market. In fact, $VIX was actually down on the day Friday, even though $SPX was off 13 points and the Dow was down nearly 100. That is an unusual and normally positive divergence. The fact that it hasn’t caused a market rally could be a cause for concern.
