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By Lawrence G. McMillan

With the market plunging this morning on news of a new COVID variant out of South Africa causing travel restrictions, we are going to attempt to work that into the market comment even though our data does not incorporate today's (Nov 26) trading. There is still resistance for $SPX near 4700, but more importantly, the $SPX chart will turn negative on a close below 4630.

Equity-only put-call ratios remain on sell signals, as put buying continues to rise. As long as these ratios are rising, they will remain on sell signals.

Breadth has been quite negative lately, and both breadth oscillators are on sell signals and are in deeply oversold territory. However, oversold does not mean buy, and today's action is certainly going to drive them deeper into oversold territory.

$VIX has edged up over the past couple of weeks, but never enough to be considered "spiking." That will probably change today. If $VIX enters "spiking mode" it will eventually set up a buy signal, but not necessarily immediately.

This is the beginning of the seasonally bullish period between Thanksgiving and the first of the new year. That will not change because of news, of course, so we continue to think that still has a chance to prevail.

In summary, this COVID news could be the tipping point for a number of short-term sell signals. We already have a few in place, and a close below 4630 would bring the $SPX chart into the negative camp, as well. But, as we have seen many times in the past, this type of selling quickly sets up $VIX "spike peak" buy signals, and they are often reliable. So, we will trade any confirmed signals that occur.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

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