Commentary by Lawrence McMillan for July 7, 2000...
optionstrategist.com
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Edited for ease of reading:
>>>Stock Market:
Remains locked in a fairly tight trading range. For $OEX, this range is roughly bounded by 775 on the low side and 805 on the high side. Even though many of our indicators are beginning to take on a more bearish appearance, we won't recommend any shorts as long as $OEX holds above that support level.
For other indices, similar support levels exist: QQQ 89, $NDX 3600, $SPX 1435, and the Dow 10,300. All of the major broad market put-call ratios have officially rolled over to sell signals: equity-only ratio, weighted equity-only ratio, $OEX weighted ratio, and the S&P 500 futures ratio and weighted ratio are all on sell signals now.
Ironically, market breadth has been IMPROVING lately (whereas earlier it had been something of a question mark). As a result, our oscillator now stands at +173. If it gets above +200, that would mark it as overbought, and it would then be in position to generate another sell signal. That is something that might happen in the future, whereas the broad market put-call ratios are more seriously bearish right now.
Meanwhile, volatility has fallen to its lowest levels in several months. That is a harbinger of a market explosion, and if it comes in conjunction with the above sell signals, we would have to surmise that such an explosion would be on the downside.
As mentioned in the last newsletter, $VIX bottomed out in each of the past two July's, marking a market top each time. The same sort of thing may be setting up once again.<<< |
