Stocks continue their wild ride. Yesterday, $SPX gapped open strongly higher, then gave back all the gains in a very short period of time when Fed Chairman Powell said that the Fed might not be buying everything, forever. But that selloff was quickly reversed in a matter of minutes. In the end, $SPX closed nearly 60 points higher, It closed right at the lower edge of the gap from last Thursday. If that gap is filled (at 3182), it would be another bullish sign. Short-term support exists at 2965 (Monday’s low, which was left in the dust by the 188-point rally that followed in about 1 trading day, as Monday’s lows were made in the morning and Tuesday’s highs were also registered in the morning; the move in futures was even larger). Below that, support in the 2920-2940 range is important. It is the top of the trading range from April-May; if $SPX were to fall back into that trading range, it would negate a lot of work that’s been done since then.
The overbought conditions intensified this past week with a couple of huge up days on June 5th and 8th, but then exploded into one of the worst down days in history on June 11th. The wild ride seems destined to continue.
Join option strategist Larry McMillan as he discusses the current state of the stock market and what our option-oriented indicators are saying.
In the November 1929 - April 1930 rally, stocks rose 48% and volatility (all that we have to go on from that time period, of course, is realized/historic volatility) dropped from 112% to 8%!! Then we all know what happened after that: the wheels came off, and the market made new lows by October 1930, and the rout was on.
Join Larry McMillan as he discusses the current state of his option-oriented stock market indicators.
Stocks broke upward out of the trading range this week, and have made new intraday highs for this rally each day since. Thus, the rally that began from the extreme oversold conditions on March 20th remains intact. There should be support in the 2940-2950 area, which was the top of the recent trading range. As for overhead resistance, the 200-day moving average was supposed to offer resistance, but so far it hasn't.
The action over the past few days has been just above those old relative highs at 2955, but has certainly not been a true breakout from the previous trading range. The high this week was 2980.
Join Larry McMillan as he discusses the current state of his option-oriented stock market indicators.
A double top is now evident on the $SPX chart in the 2950 area. So for now that is strong resistance. The question is whether we're in a trading range or a stronger downturn is in store.
There are three important support levels: 2800, 2720, AND 2650. I feel that sellers would become more aggressive as each of these were violated on a closing basis. So far, none have been.
