The market continued its upward march from the lows of Friday morning, right after that negative unemployment report. New closing highs were made, and it looks like this morning will finally bring about a new intraday high on $SPX, which is the last “hurdle” left from the 2007 highs. S&P futures are up about 5 points in Globex trading, and so that implies $SPX itself would open somewhere near 1579, which would be a new intraday high.
By Lawrence G. McMillan
The stock market has had a bit rougher time this week. Our indicators are turning bearish now, and if there is a breakdown in $SPX, a full-blown correction should be underway.
This brings up the matter of whether or not the recent $SPX breakout to new all-time highs (and the Dow's as well) was a false breakout. I would not grade the recent breakout to new highs as truly false unless $SPX falls below support at 1540-1545.
There were seemingly two stock markets yesterday. By that I mean that the big-cap stocks that have led this rally continued to do their thing, driving $SPX and the other major indices to new all-time highs. But there is a lurking problem that is perhaps coming to light: breadth was negative yesterday! I can’t recall $SPX being up 8 points, yet both “stocks only” and NYSE-based breadth being negative, but that’s what happened yesterday.
By Lawrence G. McMillan
Thankfully, the Standard and Poors 500 Index ($SPX) has finally closed at a new high, exceeding the market from October, 2007. Now that that's out of the way, perhaps we can go back to trading. Thursday's action was an upside breakout, and above that there is no resistance, per se, since prices have never traded that high. However, traders are often wont to sell at round numbers, so 1600 on $SPX may represent a resistance level.
By Lawrence G. McMillan
The new mini options began trading on March 18th. We held off writing about them for a little while so that we could see how volume and open interest were trending. A mini option is for 10 shares of the underlying stock or ETF, rather than 100 shares as is the case with “regular” options. So far, there are mini-options only on five stocks: Amazon (AMZN), Apple (AAPL), Google (GOOG), Gold ETF (GLD), and S&P 500 SPRDs (SPY).
By Lawrence G. McMillan
It always seems that the first volatility explosion sends a warning shot across the bow. That appears to be the case now.
Tuesday's low for $SPX was at 1538. That is now a support area. Below that, there is support at 1530. A violation of that level would likely signal the onset of a deeper market correction.
Meanwhile, equity-only put-call ratios may continue to be befuddled by the hedging activity of put buying.
By Lawrence G. McMillan
The term "volatility skew" refers to the situation where individual options on a particular entity have different implied volatilities that form a pattern. The pattern usually takes one of two forms: either the higher strikes have the higher implied volatilities (a forward or positive skew) or the lower strikes have the higher implied volatilities (a reverse or negative skew).
By Lawrence G. McMillan
I would expect $SPX to finally make a new all-time high soon. $SPX has support near 1530, which is also where the rising 20-day moving average currently is.
Equity-only put-call ratios continue to be mixed, with heavy call volume chasing the rising market, but heavy put volume in the form of protective put purchases. These two are nearly canceling each other out.
Market breadth continues to remain overbought and on buy signals.
By Lawrence G. McMillan
If there wasn’t such incessant media coverage today, one might have a somewhat different opinion of what’s happening in the current market. I say this with some degree of experience, having seen the early 1973 market firsthand.
The stock market continues to grind higher as the Dow Jones Industrial Average ($DJX) continues to make new all time highs. The S&P 500 ($SPX) is approximately 5 points away from accomplishing the same historic feat.
