The S&P 500 index has continued to fall this week and is now nearing the lower end of the trading range (4500 – 4700+).
An S&P
SPX,
close below 4500 would be bearish in that it would be a violation of the lower end of that range. In addition, it would be a breakdown below the December lows – often a very bearish sign, and sometimes the beginning of a bear market. So expect the bulls to strongly try to hold this 4500 support level.
On a potentially more positive note: a number of our indicators are getting oversold and thus would eventually roll over to buy signals. For example, SPX is just a tiny bit above the –4σ “modified Bollinger Band” (mBB) at the current time. If it closes below that Band, it would set up an eventual McMillan Volatility Band (MVB) buy signal. There is no guarantee that will occur, though.
Equity-only put-call ratios continue to rise, and so both ratios remain on sell signals. These are confirmed by our computer analysis programs. The weighted ratio is nearly back to its highs, indicating that it is in oversold territory. As we always say, though, “Oversold does not mean buy.” So these indicators will remain bearish until they roll over and begin to decline.
Market breadth has been terrible this month, and both breadth oscillators remain on sell signals. The “stocks only” oscillator (based on optionable stocks) is in deeply oversold territory, and the NYSE oscillator is in modestly oversold territory. They well eventually generate buy signals from these oversold conditions, but not until breadth begins to improve – probably requiring at least two consecutive days of positive breadth before turning positive.
A related indicator – the “oscillator differential” – has…
Read More: Opinion: This is the next big test for the S&P 500 as a number of
Opinion: This is the next big test for the S&P 500 as a number of
The S&P 500 index has continued to fall this week and is now nearing the lower end of the trading range (4500 – 4700+).
An S&P
SPX,
close below 4500 would be bearish in that it would be a violation of the lower end of that range. In addition, it would be a breakdown below the December lows – often a very bearish sign, and sometimes the beginning of a bear market. So expect the bulls to strongly try to hold this 4500 support level.
Lawrence McMillan
On a potentially more positive note: a number of our indicators are getting oversold and thus would eventually roll over to buy signals. For example, SPX is just a tiny bit above the –4σ “modified Bollinger Band” (mBB) at the current time. If it closes below that Band, it would set up an eventual McMillan Volatility Band (MVB) buy signal. There is no guarantee that will occur, though.
Equity-only put-call ratios continue to rise, and so both ratios remain on sell signals. These are confirmed by our computer analysis programs. The weighted ratio is nearly back to its highs, indicating that it is in oversold territory. As we always say, though, “Oversold does not mean buy.” So these indicators will remain bearish until they roll over and begin to decline.
Lawrence McMillan
Lawrence McMillan
Market breadth has been terrible this month, and both breadth oscillators remain on sell signals. The “stocks only” oscillator (based on optionable stocks) is in deeply oversold territory, and the NYSE oscillator is in modestly oversold territory. They well eventually generate buy signals from these oversold conditions, but not until breadth begins to improve – probably requiring at least two consecutive days of positive breadth before turning positive.
A related indicator – the “oscillator differential” – has…
Read More: Opinion: This is the next big test for the S&P 500 as a number of