By Lawrence G. McMillan
This is expiration week. In-the-money put open interest is dominant over in-the-money call open interest, and that is negative. However, the market would have to move lower by Friday in order for large sell programs to take place. At current levels, there is only a slightly negative bias to expiration.
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By Lawrence G. McMillan
The broad stock market has been under more selling pressure in the last two weeks than in the previous nine months. Intermediate-term indicators are all bearish at the current time, but after five weeks of selling, some oversold conditions have arisen.
First, the chart of $SPX is in a downtrend, and that is bearish.
By Lawrence G. McMillan
We normally follow the equity-only put-call ratio as one of our main contrarian indicators. However, there is another put-call ratio that we follow from time to time, as it gives occasional signals. That is the total put-call ratio, and it is on the verge of giving a buy signal. We last wrote about this almost exactly a year ago (Volume 19, number 10&11 [double issue]). In this article, we’ll review the indicator and update the results over the past year.
By Lawrence G. McMillan
For the first time in quite a while, the bulls seem to have no power. Rallies are weak and quickly fade to new lows. Oversold conditions that, in the recent past, would have generated strong reflex rallies are having no effect at all. So the overall picture is bearish, but those oversold conditions continue to build along with some other buy signals, and so are worth noting as well.
By Lawrence G. McMillan
Tuesday's market action was extremely negative. A rally attempt stalled out in the afternoon, and that was bad enough considering the amount of oversold conditions that existed. But then the entire rally was erased in late-day trading, and S&P futures have continued on down another 6 points in Globex trading tonight. There is really no way to put lipstick on that pig. It was just plain ugly.
By Lawrence G. McMillan
$VIX spiked up to almost 20 last Friday and then reversed back downward to nearly 17. Currently, it stands at 17.82. A spike peak reversal of that magnitude is at least a short-term buy signal for the stock market. $VIX has probed to or above the 19 level four previous times since mid-April, and a tradable stock market rally has followed each time. Will this be the case again this time, considering that there are other, more negative, indicators at work as well?
An increase in the trading of a stock's options over the normal daily volume is often a precursor of movement by the stock itself. This is especially true in advance of news items, such as earnings reports or takeovers.
By Lawrence G. McMillan
There seems to be a bit of a hangover from Friday’s action. Despite some potentially positive movement in $VIX, the market can’t seem to rally today. $VIX spiked up to nearly 20 on Friday and then fell back to almost 17. A reversal of that size is a positive factor for the stock market. In fact, $VIX was actually down on the day Friday, even though $SPX was off 13 points and the Dow was down nearly 100. That is an unusual and normally positive divergence. The fact that it hasn’t caused a market rally could be a cause for concern.
By Lawrence G. McMillan
Currently, the dominant theme of the $SPX chart is its downtrend. There is now resistance at 1330, and above that, at 1345.
The equity-only put-call ratios have steadfastly remained bearish since rolling over to sell signals in mid-to-late April. As long as they are rising, that is bearish for stocks.
At the current time, breadth indicators are on sell signals.
$VIX is still in the process of rising off of its recent lows. If it closes above 19, that would be negative.
By Lawrence G. McMillan
Breadth was terrible yesterday, making Wednesday a true 90% down day in terms of “stocks only” data and a 90% down volume day in NYSE terms. This is the first true 90% down day since March 10th. That usually means that one can expect a reflex rally in the next day or two, but also indicates that lower prices eventually lie ahead.
