The S&P 500 Index continues to trade in a bear market. The S&P chart has clear downtrend lines, surrounding a series of lower highs and lower lows. This is our definition of a bear market. Recent rally attempts based on oversold buy signals coming from June lows have not met with much success.
SPX currently at 3740, has -0.95% support, which will be tested soon – probably today. Then there is support at the year-to-date low of 3630.
Meanwhile, there is resistance at the end of June rally high of 3930. A move above this is about to move into a declining “Modified Bollinger Band”. But in the classic sense, there is also resistance at 4017 (where the June gap is closed) and then 4070 – the bottom of the June opening trading range.
Equity-only put-call ratio will remain unchanged on sell signals. In fact, they are kind of deviating, but will not give a confirmed buy signal until they break below their opening June lows. Those levels are marked with a horizontal red line on the accompanying chart.
Lawrence Macmillan Lawrence Macmillan
Market breadth has been one of the more positive indicators, as both breadth oscillators last gave buy signals on July 1 and have held on somewhat surprisingly since then. That is, the market is battling with the economic data, yet the breadth has not been bad.
However, today’s action could eventually roll back these widening oscillators to sell signals in an oversold state.
New 52-week highs remain low in numbers. Most days only single-digit numbers appear in the “new highs” count on the NYSE. As a result, the indicator remains on a sell signal.
VIX VIX, +1.68% remains in its own world. It has declined significantly since the latest “spike peak” buy signals in mid-June, and those signals have yet to stop. An increase of 3.00 points or more in any three-day or lesser period, will stop them.
Meanwhile, the VIX fell towards its rising 200-day moving average, but did not close below it. Thus, the intermediate-period signal – the trend VIX – The stock remains bearish. That 200-day MA is currently at 24 and rising, and if the VIX were to close down from there, it would stop the sell signal (it would be NoHowever, create a buy signal).
Construction The volatility for stocks derivatives remains marginally positive, with the term structure of VIX futures continuing to slope upward.
In short, we continue to maintain a “core” bearish position in line with a downtrend in the SPX and an uptrend in the VIX. We will trade the confirm buy signal around that “core” position.
New Recommendation: Apples
A put-to-call-ratio buy signal is generated in Apple AAPL, +1.09%.
Buy 2 AAPL Sep(16th) 150 Call
in line with the market.
AAPL: 144.05 Sep (16th) 150 Calls: 5.90 Bids, 5.95 . offered on
We will keep this as long as the put-call ratio buy signal remains in effect.
follow up action
All stops are mental closing stops unless otherwise noted.
We are going to apply a “standard” rolling process to our SPY spreads: in any vertical bull or bear spread, if the underlying hits the short strike, roll the entire spread. he will roll UP Call Bull Spread, or Roll . In the case of below In the case of a bear spread. Stay in the same finish, and keep the distance between strikes the same unless instructed otherwise.
Long 2 Expiring SPY Jul (15th) 366 Put and Short 2 SPY Jul (15th) 346 Put: We originally bought this spread SPY with a sell signal of -0.90% trend of VIX. It was taken down twice. roll back now End of August (19th), keeping strikes equal. If the VIX breaks below its 200-day moving average, which is currently just below 24, we will close this position.
Long 5 KOD Jul (15th) 10 Calls: The strike continues without stopping.
Long 1 SPY Jul (22th) 382 Call and Short 1 SPY Jul (22th) 397 Call: This spread was originally bought in line with the latest VIX “Spike Peak” buy signal of June 15th. It was rolled up at the time of SPY. business at 382. If VIX. then this signal will turn off Switches back to spiking mode. i.e., if $VIX off At least 3.00 points higher in any one-, two- or three-day period, then exit this spread. Today it will be a VIX above 29.17. The stop can move every day. If you are stopped, re-enter a long bull spread position when the next “spike peak” buy signal occurs.
Long term (15th) 22.5 call expiring on 3rd July: These calls were rolled up with Amalex Pharmaceuticals AMLX, trading +1.54% at 22.50 on 7 July. roll to the August (19th) 22.5 cols. Closing stop at 17.00 . extend to
Long 1 SPY Aug(19th) 378 Call and Short 1 SPY Aug(19th) 398 Call: This spread was bought in line with the Macmillan Volatility Band (MVB) buy signal. Its target is SPX to . Is for Touch +4σ band. Signal will be turned off if SPX has to close -4σ below the band.
Long 10 Crnt Aug (19th) 2.5 Calls: Hold on while the acquisition rumors surface.
Long 2 Cow Aug (19th) 30 Calls: The stock has risen as rumors persist. Continue to hold without stopping.
The put-call ratio in the News Corp NWSA, -1.26% is no longer on the buy signal, and the NWSA call buy conditions were not met. Hence this recommendation is rejected.
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Lawrence G. Macmillan is the president of Macmillan Analysis, a registered investment and commodity trading advisor. Macmillan may hold positions in the securities recommended in this report, both personally and in client accounts. He is a seasoned trader and wealth manager and the author of the best-selling book “Options as a Strategic Investment”.
Disclaimer: © Macmillan Analysis Corporation is registered with the SEC as an Investment Advisor and with the CFTC as a Commodity Trading Advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. Officers or directors of Macmillan Analysis Corporation, or accounts managed by such individuals, may have positions in advisory recommended securities.