Join Larry McMillan as he discusses the current state of the stock market on Monday, September 7th, 2020.
The S&P 500 Index ($SPX) and NASDAQ ($NDX; QQQ; $COMPQ) were having one big party, with new intraday and/or closing highs having been registered for 11 of 12 days ($SPX) and 13 in a row ($NDX). That party came to a swift end yesterday, Thursday, September 3rd. But has the party really ended, or is this just a pause? $SPX did not even quite pull back to its rising 20-day moving average.
A week ago, $SPX was struggling to break through the old highs just below 3400. That is no longer the case, as the Index made a strong move upward this week, allaying any fears of a double top and punishing the shorts once again.
Join Larry McMillan as he discusses the current state of the stock market on Monday, August 24th, 2020.
The S&P 500 Index ($SPX) finally made a new all-time closing high this week, both intraday (Aug 18th and 19th) and closing (Aug 18th). This was cause for selling in some circles. As we've noted before, this is understandable in terms of the investor who says "Whew! I'm finally back to even," and sells. We have seen these little resistance areas since mid-May, and each time $SPX has been able to overcome them and move to new highs.
The CBOE has listed mini volatility futures, trading with the base symbol VXM. These are worth $100 per point of movement, as opposed to the $1,000 per point of movement on the “big” volatility futures contract. Everything else is the same between the mini and the full contracts: expiration date, settlement pricing, etc. So far, only the first four months have mini contracts, while there are “big” volatility futures for nine months out. In hedged strategies, these can now be paired with the micro e-mini S&P futures (worth $5 per point of movement). This will allow smaller accounts to take advantage of some of the more sophisticated strategies. Volume in the mini volatility futures has been mostly in the front month, but the markets are tight (5 cents wide) so they are a viable trading tool at this time.
At the current time, realized volatility is dropping, $VIX is dropping more slowly, and $VIX futures are remaining at fairly lofty levels because of the uncertainty surrounding the upcoming Presidential Election. So, we decided to take a look back and see if there had been any other times when there was such a large discrepancy between the near-term $VIX futures and historical volatility. It turns out there was only one other time when the premium differential was larger – in late January, 2009. However, it doesn’t seem that there is any market-predicting parallel here.
Join Larry McMillan as he discusses the current state of the stock market on Monday, August 17th, 2020.
As $SPX has approached the all-time highs, some selling has appeared. This is understandable, as many traders probably figure they are grateful to have gotten "even" and are looking to reduce exposure, considering that the future could be volatile and uncertain. However, our indicators remain bullish, and we expect further upside progress.
The market, as measured by $SPX, moved to new relative highs this week, finally breaking out over resistance at 3280. From there, it quickly moved to 3330, closing the huge gap down that had been left on the chart from when the bear market began on February 24th. Now, it has its sights set on the all-time highs at 3395, which is the last remaining resistance area. After this week's action, a close back below 3200 would be cause for concern.
