The S&P 500 is close to crossing this critical level and challenging the bearish market trendline

The S&P 500 is close to crossing this critical level and challenging the bearish market trendline

The S&P 500 may be about to lock in two major bullish SPX indicators,

First, the S&P rose from the mid-June low to the major resistance level at 4170. A two-day close above this level would be quite bullish and would set the stage for a challenge to the downtrend line defining this bear market as well as the challenge of the 200-day moving average. – and both are currently close to 300.

Secondly, the trend of VIX is changing, which means a medium-term buy signal. More on that later.

Lawrence MacMillan

As the stock market advances, some indicators are in overbought territory. It will eventually generate sell signals, and we will trade them as they happen.

One of the first reasons is that SPX has now closed above +4σ “Modified Bollinger Band” (mBB). This will eventually set up a ‘classic’ mBB sell signal when SPX eventually closes again below the +3σ range.

However, we will not trade this signal. We will wait to see if there is a confirmation of the ‘classic’ sell off, which could mean a Macmillan Volatility Range (MVB) sell signal. that we will trade, but this is not necessarily guaranteed.

Anyway, neither the “classic” sell signal nor the MVB signal has yet occurred.

Only stock purchase ratios continue to decline, thus both ratios remain optimistic in their outlook for stocks. The weighted ratio was dropping more quickly and is already in the lower half of the graph. As long as these ratios are on the decline, this is considered bullish for the stock market.

Lawrence MacMillan

Lawrence MacMillan

The breadth was strong on this rally, and both of our broad oscillators remain on buy signals – somewhat in overbought territory. This overbought condition is a positive in the early stages of a new bullish phase in the stock market (and I think we are still in the early stages of that rally). Supply oscillators are in high numbers so they can withstand a few days of negative supply and stay on those buy signals. Eventually, a sell signal will appear from the range, but this is not immediately available.

The only sell signal left is to compare the new 52 week highs vs. lowest levels. New highs on the NYSE are still small in number (25 on Wednesday, peaked over the past week at 45 in one day). Thus, this indicator remains negative.

+ 0.32%
Continue to decline slowly as the market rises. However, there appears to be a significant change in the direction of the mid-range for VIX.

VIX crossed below the 200-day moving average last week, when it fell below 24. Now the 20-day moving average for VIX is crossing below the 200-day moving average. If it holds this cross below, it means that the VIX trend is bearish (i.e. both the VIX and the 20 day moving average are below the 200 day moving average).

The downtrend VIX indicator is a medium term buy signal for the stock market. This is the first time since last November that the VIX trend has fallen.

Lawrence MacMillan

composition of volatility derivatives VX00,
improved as well. It was slightly bullish for the stock, but is now fully bullish. The VIX forward structure term is sloping upward (it is slightly flat at the far end). Also, the term structure of the CBOE volatility indices is positive.

In short, a “basic” bearish stance would not be warranted if SPX closed above 4170 for two consecutive days, and it could happen very quickly. In the meantime, we continue to hold our various long positions that were bought in line with our indicators. Eventually, we will start to see sell signals, but they haven’t appeared yet.

New Recommendation: VIX Trend Buy Signal

As noted in the market commentary above, VIX is about to get a major medium-term buy signal for the stocks in that they have started to trend downward. We want to trade this signal:

If VIX Closed less than 24.00 today,

Then buy 1 SPY Seven (16The tenth) at-the-money call

Sold 1 SPY Seven (16 .)The tenthCall an amazing 15 pips higher price.

If this position is created, we will hold it as long as $VIX does not exceed its 200-day moving average. Specifically, stop exiting if VIX closes above 24.60 for two consecutive days.

New Recommendation: SPX Breakout Buy Signal

As mentioned in the above market comment, SPX SPY,
On the verge of a major bullish breakout.

If SPX Closed above 4170 for two consecutive days,

Then buy 1 SPY Seven (16The tenth) at-the-money call

Sold 1 SPY Seven (16 .)The tenthCall an amazing 15 pips higher price.

If bought, we will stop ourselves at SPX close below 4070.

New Recommendation: VanEck Oil Services ETF

This recommendation is based solely on the buy-to-buy ratio buy signal for the VanEck Oil Services ETF OIH,
From the accompanying chart, one can see that the previous buy signals over the past year have been well timed. Since these are high priced options, we will be using a buy bull spread.

Buy 2 OIH Seven (16The tenth230 calls

And sell 2 OIH Seven (16The tenth250 calls

In line with the market.

OIH: 231.85 seven (16 .)The tenth) 230-250 bull buy spread: 8.30 bid, displayed at 9.30

We will keep this position for as long as weighted The OIH buy-to-be ratio remains on the buy signal.

Lawrence MacMillan

Follow the movement

All breakpoints are mental breakpoints unless otherwise noted.

We will implement a “standard” rolling action for our SPY spread: on any vertical bull or bear spread, if the underlying hits the short, roll the entire spread. That will be a roll above In case of bull call spread or roll lowest In the event of the spread of bears. Stay at the same expiration, and keep the distance between strokes the same unless otherwise instructed.

Long 6 AMLX Aug (19The tenth22.5 Calls: Raise the closing stop to 21.50.

Long 1 SPY Aug (19The tenth) 398 SHORT CALL 1 SPY Aug (19The tenth418 calls: The SPY buy spread was originally bought in line with the McMillan Volatility Range (MVB) buy signal, and it has been rotated. It was recently introduced when SPY was trading at 398 on July 21. His goal is for SPX to touch the +4σ range, and it did, so sell that spread now.

LONG CALLS 10 CRNT (Aug 19) 2.5: Aviat Networks AVNW,
+ 1.09%
announces that it has submitted a revised, non-binding offer to acquire all outstanding shares of Ceragon Networks CRNT,
for $3.08 per share ($2.80 in cash per share, plus $0.28 in equity). Keep holding until now.

Long 2 COWN August (19The tenth30 calls: COWN Company,
+ 0.21%
Takeover offer for $39 cash. Sell ​​these calls at 8.20 or more; Leave the rest to risk.

Long 2 AAPL Sep (16The tenth160 calls: This situation was brought up when Apple AAPL,
It is trading at 160. We will keep these indicators as long as the buy-buy ratio buy signal is still valid.

Long 2 SPY Aug (19The tenth) 411 calls and shorts 2 SPY Aug (19 .)The tenth426 calls: These spreads were bought on July 21, when several indicators generated buy signals. It was then floated when SPY was trading at 411 on July 29th. We will stop ourselves from exiting this trade in the following way: sell half if the oscillators display regression to sell sell signals and sell half if only the stock option is going to go down ratios to sell signals. Both are still on buy signals at this time (see market comment above).

Long 1 SPY Seven (16The tenth) 402 SUT AND SHORT 1 SPY Seven (16 .)The tenth) 377 put: Stop this position if SPX closes above 4170.

Long 3 MRO October (21Street24 calls: We will hold this position for as long as the buy-to-be ratio of Marathon Oil MRO,
Still a buy signal.

Send questions to:

Lawrence G. Macmillan is Head of Macmillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in the securities recommended in this report, either in person or in client accounts. He is an experienced trader, money manager and author of the bestselling book Options as a Strategic Investment.

Disclaimer: © McMillan Analysis Corporation Registered with the Securities and Exchange Commission as an investment advisor and the Commodity Futures Trading Commission 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. The officers or directors of McMillan Analysis Corporation, or the accounts managed by such persons, may have positions in the securities recommended in the advisory.

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