Lawrence G. McMillan says:
Stock Market
The broad stock market has encountered some trouble lately, in line with the sell signals from
our indicators. The market started down in earnest after the sell signal arrived from our oscillator,
which accompanied earlier se ll signals from the various equity-only put-call ratios. While none of
the indicators is as bearish as it was a couple of weeks ago, they have not yet reversed to buy
signals, so we'll just have to wait and see what develops.
The equity-only put-call ratio, after a sell signal in June, is forming a tight formation currently. Iif it
breaks downward from here, that will be a buy signal for the market; if upward, the sell signal will
be re-confirmed. The weighted equity-only put-call ratio is displaying a similar formation:
when the ratio breaks to a new low or exceeds the high of mid-July, the next signal will be in
effect. Finally, there is the breakdown of the equity-only ratio into its NYSE component stocks
and NASDAQ component stocks. These, too, are similar: both have been "consolidating" lately
and a breakout will signal the next move. One other thing can be observed from the latter chart:
there is a lot more call buying going on in NASDAQ stocks than in NYSE stocks. In fact, since
their buy signals in May, the NASD graph has fallen a great deal more (indicating more call
buying) that the NYSE has.
As for our other broad market indicators, here are their interpretations:
$OEX weighted: remains firmly on a sell signal
$NDX: both normal and weighted remain on sells
QQQ: wavering at low levels somewhat bearish
S&P 500 futures options: both normal and weighted have
re-issued fresh sell signals.
Finally, our oscillator after having given a timely sell signal a week ago Monday has now returned
to neutral readings. It currently stands at -36. We would expect to see it fall into oversold
territory (below 200) and thus be able to register a buy signal somewhere down the road. |
