By Lawrence G. McMillan
As readers know, we have been bullish continuously since early June. Even as late as a week ago, it still seemed possible for this market to move higher over the short term. But recent events and indicator changes have put this short-term forecast into jeopardy.
By Lawrence G. McMillan
The stock market continues to mark time, in the wake of the massive overbought condition that arose on September 14th -- right after the Fed announced the latest round of Quantitative Easing. This type of action will, in my opinion, lead to a rally to new highs.
$SPX remains well within the bullish channel that has defined this market since the early June lows.
By Lawrence G. McMillan
The stock market continues to mark time, not really declining much as it works off the overbought condition from a couple of weeks ago. It is still our opinion that once this short-term correction is over, higher prices will lie directly ahead.
By Ryan Brennan
Naked put-selling is a very popular and potentially profitable trading strategy, but choosing what puts to sell can sometimes be a guessing game. McMillan's Probability Calculator Software is a very helpful tool for analyzing potential put-sales since it can estimate the chances of making money in your positions.
By Lawrence G. McMillan
We often say that it is positive for an emerging bull trend to get heavily overbought – that this is an indication that the rally is strong and broad. In this article, we’re going to put that statement to the test by identifying (and quantifying) severely overbought markets and seeing how they performed up to 100 trading days later. This should provide some solid evidence of whether we need to relish or fear a severely overbought market.
By Lawrence G. McMillan
The broad market, as measured by the S&P 500 Index ($SPX) remains in a bullish uptrend. The recent selling has drawn the index down from the top of the bullish channel that has defined this uptrend since early June (see Figure 1), but it only pulled back about halfway through the channel.
Equity-only put-call ratios are mixed. The standard ratio (chart, above left) continues to decline nearly every day. Thus it remains on a buy signal. The weighted ratio has now curled upward and is marked as a sell signal.
By Lawrence G. McMillan
The long-awaited correction appears to have begun. So far, the damage is minimal and is completely within the realm of an overbought correction. However, all declines start out looking “normal,” so we must be alert as to the possibility of a more serious technical breakdown.
By Lawrence G. McMillan
The stock market continues to be resilient, if dull. The bears have not been able to force prices downward, despite what was a very overbought condition a week ago.
Equity-only put-call ratios remain bullish. Both the standard and weighted ratio have now made new lows for this recent move, and that confirms their buy signals.
By Lawrence G. McMillan
The stock market loves the fact that the Fed announced an other round of easing (QE III) but also hinted that such operations would continue into the foreseeable future (QE forever).
By Lawrence G. McMillan
Yesterday's market was one of the quietest days so far. $SPX had a total range of 5.34 points for the entire day. That is minuscule. In recent months, this sort of action has only been a precursor to further upside movement – and it wouldn't be surprising to see it happen again. Of course, there are still overbought conditions, but we would expect any correction to be short-lived and probably contained by support at $SPX 1430-1440.
