The McMillan Options Strategist Weekly
The broad market recovered quickly from this week’s selling. A volatile trading range is emerging. In $SPX, the low end is just above 1180 (so that’s support) and the upper end is 1220 or so. 
Equity-only put-call ratios are on sell signals. The standard ratio is the stronger signal, having generated a sell signal a couple of weeks ago, and then moving steadily higher since then. The weighted ratio, however, has been less certain. 
Market breadth was heavily negative this week. That alleviated the overbought conditions in breadth. 
Volatility indices ($VIX and $VXO) spiked higher this week, and then dropped down again. Thus, there are spike peak buy signals on these volatility index charts (see Figure 4). 
In summary, the two large “scares” of the past two weeks have put the bulls on notice that the market can go down — even if only briefly. However, the indicators remain generally bullish, so any corrections are expected to be sharp, but short-lived.
Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader’s library.
This Market Commentary provided by:
www.TigerSharkTrading.com
Tiger Shark Trading is a destination web site for savvy traders and provides daily commentary from some of the world’s top professional traders. Check it out.
It should not be assumed that the methods, techniques, or indicators presented on these websites will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these websites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
