Thanksgiving sets off a number of seasonal patterns, although we combine several of them for one trade. The three main seasonal patterns are:
1) post-Thanksgiving bullishness: buy the market at the close of the day before Thanksgiving and hold into mid-December.
Join Larry McMillan as he discusses the current state of the stock market on Monday, November 23rd, 2020.
We have been trading this seasonal spread annually every year since 1994, except for 1995. The spread has a good track record, but suffered its worst loss to date last year. All of the pertinent statistics are included below.
The broad market, as measured by $SPX, finally reached a new all-time closing high this week, at 3626 on Tuesday, November 16th. It was unable to hold that level and has now fallen back a bit. In fact, it has closed back below the old September highs of 3588. That in itself is not a problem, but if $SPX were to close below 3500, that would be bearish.
We have continually been talking about how low the equity-only put-call ratios have been this year – first in January when they dropped to the lowest levels since levels since 2014, but then again in August when they dropped to the lowest levels in our database, which goes back to 2001.
Join Larry McMillan as he discusses the current state of the stock market on Monday, November 16th, 2020.
Last Monday, the COVID-19 vaccine new caused $SPX to gap up 135 points on Monday's open. That was the largest percentage gap to a new all-time high in history.
As traders know, there's an old adage to "sell the news," especially if there has been anticipatory buying before "the news." And they did, drving $SPX back inside its 3200-3600 trading range.
Join Larry McMillan as he discusses the current state of the stock market on Monday, November 9th, 2020.
Election-related or not, the move from the bottom to the top of the $SPX trading range in just four trading days was impressive. The trading range extends from 3200 to nearly 3600 (the all-time highs at 3588). The recent moves have pretty much obliterated what had been a support and resistance area near 3400-3430, so the edges of the range itself are the only meaningful support and resistance currently.
Did you know McMillan Volatility Bands can be used on intra-day charts? McMillan Volatility Bands, a charting analysis tool developed by world-renowned options trader and author Lawrence G. McMillan, is an optimized approach to John Bollinger's Bollinger Bands. Leveraging his expertise in options trading, Lawrence designed his volatility-based version with a focus on how option prices are calculated – using the Black-Scholes definition of volatility. The McMillan Volatility Bands' pricing model assumes a financial asset's volatility should be measured in percentage change rather than absolute value change.
