By Lawrence G. McMillan
Once again, $SPX made new post-2008 closing and intraday highs, and now it has finally closed above the 2011 intraday highs (oh, and yes, the Dow Jones Industrials closed above 13,000, so maybe we can stop hearing about this ridiculous and meaningless number from the media for a while). There is strong support in the 1340-1350 area. The slow-motion ascent remains in place. The last time that $SPX closed below its 20-day moving average was December 20th, 2011. The last day that $SPX even touched its 20-day moving average was December 21st, 2011.
By Lawrence G. McMillan
The S&P 500 Index ($SPX) pulled back only a little, but that was enough to alleviate some of the overbought conditions and to establish support at 1340.
Equity-only put-call ratios have begun to move sideways recently, but they remain on buy signals.
Market breadth was fairly negative from Feb 10th through Feb 15th. That was enough to alleviate the serious overbought condition that had existed in the breadth oscillators. Since then, breadth has improved again, and at this time, breadth is on a buy signal.
By Lawrence G. McMillan
In the last issue, we laid out a trading system for VXX and XIV, the most liquid short-term volatility ETN’s. VXX uses the two front-month $VIX futures contract to create an instrument that tracks near-term volatility directly, while XIV is the inverse of the same thing.
We had left a few questions open at the end of that previous article, and we aim to answer those in today’s issue. Moreover, some reader questions have been asked as well, and we will address those too, since they are important to the overall concept.
By Lawrence G. McMillan
In a brazen display of strength, the stock market — as measured by the Standard & Poor’s 500 Index — held up very well this week. Tuesday was perhaps the most crucial day in that a large number of traders had pre-announced that they would become sellers upon the news that either a) the Greek debit crisis had a definitive settlement plan, and/or b) the Dow Jones Industrial Average hit 13,000. Both of those things occurred on Tuesday morning, and yes the market did decline — at first.
By Lawrence G. McMillan
The market had all kinds of good news hurdles to overcome yesterday, and it did a pretty good job of it. The number of traders looking to sell when either a) the Greek agreement was reached, and/or b) the Dow hit 13,000. Both of those occurred yesterday morning, and the market did indeed fall back. But then it rallied later on, posting small gains for the day. To me, that was fairly bullish action. A microcosm of that action took place overnight as well, with the futures falling and then recovering.
By Lawrence G. McMillan
Was the two-day selloff on Tuesday and Wednesday of this week enough to refuel the bulls? It may have been.
$SPX closed at a new high for this post-October rally, although it has not yet exceeded the 2011 high at 1370. With today's rally there is clearly strong support at 1340. which is at 1290.
Equity-only put-call ratios are technically on buy signals. However, they edged higher over the last two days.
By Lawrence G. McMillan
The stock market has generally persisted in rising, albeit at a slower and slower pace, but it has taken on the appearance of a very tired entity. Therefore, we expect that the price correction of which we have been speaking for the last couple of weeks is at hand.
Perhaps it was precipitated by the parabolic move in Apple AAPL -0.94% that ran out of steam today, or perhaps it is once again worried about the Greek debit crisis. In my book, the former is more worrisome to the market than the latter.
By Lawrence G. McMillan
The stock market refuses to back off. This is making TV commentators gleeful, but experienced traders are finding such one-sided action to be a bit dangerous.
By Lawrence G. McMillan
The CBOE’s Futures Exchange introduced futures on the volatility index, $VIX, in 2004 and began trading options on $VIX in 2006. The Barclay’s Volatility ETN (VXX) has been around since January 31, 2009. VXX owns $VIX futures and rolls them in a manner consistent with the formula for creating $VIX. Hence the two – $VIX futures and VXX are directly related. We have recently conducted a study, investigating a trading system for VXX, based on the differential in the prices of the two front-month $VIX futures.
