By Lawrence G. McMillan
(Marketwatch) - Just a week ago, the market had its worst day of the year. The Standard & Poor’s 500 Index finally touched and even closed below its 20-day moving average, for the first time in 52 trading days.
By Lawrence G. McMillan
The gaps between historical volatility and implied volatility have never been larger. Furthermore, the gaps between $VIX and the intermediate-to-long-term futures have rarely been larger, as well. Trading desks around the street are aware of these facts and those with “volatility desks” are writing about the situation or making recommendations because of it. The one thing that no one seems to be addressing, though, is why the term structure of the futures is so steep and remains that way.
By Lawrence G. McMillan
About this time last year, a popular study was released that showed the results of trading just the first trading day of the month. That is, buy “the market” at the close of the last trading day of one month and sell out your position at the end of the next day – the first trading day of the new month. In 2010, it was so successful that one could have captured 93% of the $SPX gain for the entire year by just being invested on 12 days – the first day of each month.
By Lawrence G. McMillan
It’s one thing when the media distorts facts, but it’s an entirely different matter when they try to change the definitions of mathematics. Mathematician Jacob Bernoulli quantified the principle of the Law Of Large Numbers. This “Law” basically means that a random distribution will converge to the mean if a large number of trials is observed.
By Lawrence G. McMillan
A small market correction finally occurred this week, but it seems like it was nothing more than an opportunity for the bulls to buy at lower prices. $SPX once again established the 1340 level as support; in fact, it was a virtual trampoline as the index spurted higher after touching it on Tuesday.
Equity-only put-call ratios turned negative this week and remain on sell signals.
By Lawrence G. McMillan
For a market that has been rather dull and steady, there certainly seems to be a large number of interesting items to talk and write about. So, this week, we’re going to address a number of these because I think they could all be important at one point or another in the coming weeks and months, as this market tries to determine its major direction.
By Lawrence G. McMillan
The levitation act is over. History shows us that the market is about to become more volatile. However, the market move can be in either direction.
By Lawrence G. McMillan
The pressure that has been building is weighing more heavily on the market now. This will be the 10th day in the last 11 that “stocks only” breadth has been negative (unless there is a monster rally this afternoon). As a result, that breadth oscillators is approaching oversold territory. It’s been quite some time since anything has been oversold, as far as the major averages go.
By Lawrence G. McMillan
Perhaps the first crack in the armor of this slow-motion bull market occurred this week, after Ben Bernanke spooked the market with his contention that there wouldn't be further easing.
The $SPX chart is still bullish. There is support at 1340-1350, and the 20-day moving average is at about 1350.
Equity-only put-call ratios remain on buy signals, but the weighted ratio is so low on its chart that it might be capable of rolling over to a sell signal without a lot of trouble.
By Lawrence G. McMillan
MORRISTOWN, N.J. (MarketWatch) — As this bull market has progressed — especially the most recent leg since the early October lows of 2011 — volatility has steadily dropped. Now it has reached a point where one might reasonably consider defensive or even bearish strategies, but not until there is at least one initial break in the bullish trend.
