$SPX remains in a strong uptrend. However, it has reached overbought levels, in that it is "too far" above its 200-day moving average. The first support level is 1670, and if that is violated, traders should turn cautious.
The equity-only put-call ratios remain on buy signals, despite "wiggles" at the end of some charts.
When one says that “the market” is overbought, he really means that a number of trusted indicators are in extreme states of bullishness. Recognizing that “the market” is overbought is only moderately useful. That’s because an overbought market can still rise strongly, while remaining overbought. Things work similarly, but in reverse, for oversold markets.
In the final article on the new features in Option Workbench 2.1, we will be providing some information on Profile Filtering and also discussing some of the Other Enhancements and Bug Fixes.
Now that the Standard & Poors 500 Index ($SPX) has made new intraday and closing highs, joining the other major indices (except NASDAQ), there is once again no overhead resistance. However, increasingly overbought conditions may combine to slow the rally at least temporarily. $SPX has support just above 1670 (last week's lows), then again at 1650 (the June highs), and then at 1625 or so, where it traded for a time early this month.
Wtih the recent release of Option Workbench 2.1 we have planned to publish three blog posts detailing the various new features. In today's article - the second in the series - we will be providing some information on Using Fat Tail Distributions.
We are pleased to announce that Option Workbench 2.1 has been released. There are several new features in this release that improve your control over how probabilities are calculated, analyzed and used by Option Workbench. Below is some information on the new probability analysis.
The feature article deals with the fact that, once again, $VIX is receiving criticism when it really shouldn’t. Most people really don’t understand what $VIX should and shouldn’t be used for. We try to shed some light on the topic, in light of recent articles published on the subject.
The "interpreters" are in charge of this market. They are the people who interpret what they think Bernanke said, and then they act accordingly in the stock market. Frankly, I am in the camp that Bernanke has not changed his message at all -- he has consistently said that QE will remain in force until economic conditions improve (and there is no improvement -- at least in the indicators he is watching).
