Weekly Stock Market Commentary 11.1.13

Stocks can go down, and it now looks like they will.  The market, as measured by the Standard & Poors 500 Index ($SPX) continued to rise at a dizzying pace until the Fed meeting ended on Wednesday. Now stocks are taking on a more bearish tone.

Typically, the market pulls back to at least the 20-day moving average in these situations, and usually overshoots that target. Currently, that 20-day moving average is at 1725.

Equity-only put-call ratios remain on buy signals.

Market breadth has weakened considerably in the last few days. After Thursday’s close, breadth indicators are now on sell signals.

Volatility indices ($VIX and $VXO) rose slightly, but have not risen enough (yet) to jeopardize their bullish status.

In summary, the market seems to need to refuel.  It can probably do that by pulling back to its rising 20-day moving average.


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Larry McMillan


Professional trader Lawrence G. McMillan is perhaps best known as the author of Options As a Strategic Investment, the best-selling work on stock and index options strategies, which has sold over 300,000 copies. An active trader of his own account, he also manages option-oriented accounts for certain individuals. In a research…