fbpx Weekly Commentary 6/22/2012 | Option Strategist

Weekly Commentary 6/22/2012

By Lawrence G. McMillan

The stock market had just about everything going for it in technical terms this week, but then the fundamentalists delivered a nasty blow today (Thursday, June 21st). Technically $SPX is just below the support level of 1330-1340.

Equity-only put-call ratios remain on buy signals, despite Thursday's large decline.

Market breadth was very poor on Thursday.  As a result, both breadth oscillators registered sell signals.

Volatility indices ($VIX and $VXO) were the last indicators to turn positive earlier this week.  That occurred when $VIX fell below 21 on Monday and then proceeded to drop to 17 by mid-week.  As we have been saying for some time, $VIX above 21 is bearish for stocks, while $VIX below 21 is bullish.

In summary, the technical indicators remain bullish, except for breadth.  We are going to give the upside the benefit of the doubt.  But if $SPX should decline further, or if $VIX should close above 21, or if the put-call ratios should roll over, then we would have to relinquish our currently bullish stance.

Sign up for The Option Strategist Weekly Updater to receive this market commentary delivered to your inbox each Friday for free.

The Option Strategist $29 Trial

Share this

Option Strategist
Blog Search

Recent Blog Posts

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.