Category Archives: Technical Analysis & Charts

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New Study – Funds That Use Options (Part 3 on Related Benchmarks & SPX Options)

A groundbreaking new study — “Highlights of Performance Analysis of Options-Based Equity Mutual Funds, CEFs, and ETFs” authored by Keith Black and Edward Szado — analyzed SEC-regulated investment companies that focus on use of exchange-listed options for portfolio management (options-based funds). This is my Part 3 Blog on the study. The first part of the […]

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Weekly Market Commentary 1.2.15

Stocks stumbled into year end, with a couple of down days, the second of which was downright nasty.  But was this just illiquid, year-end manipulation (as the bulls suggest) or is it something more serious?  It’s a little early to tell at this point, but if things don’t improve quickly, then the bears have a […]

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Capitulation Or Acceleration? – Weekly Market Outlook

Stocks toyed with the idea two weeks ago, but pulled the trigger last week.  What’s that?  A significant stumble.  After the bullish momentum slowed the first full week back after Thanksgiving, it reversed – in spades.  The S&P 500’s (SPY) (SPX) 3.5% pullback last week was actually the worst single calendar-week performance since August of […]

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Weekly Market Commentary 12.12.14

Various indicators have been turning bearish since mid-November.  But until this week, $SPX itself had not broken down, and since price is “king,” that was quite important.  However, now $SPX has broken down, as it has fallen below support at 2050.  This completes a bearish pattern, and a full-fledged correction is underway. This could be […]

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Weekly Market Commentary 12.05.14

The stock market, as measured by the Standard & Poor’s 500 Index ($SPX), sold off for a couple of days and then rebounded quickly to new all-time intra-day and closing highs.  However, sell signals and overbought conditions abound, so all is not bullish. With $SPX making new all-time highs, its chart is bullish, and the […]

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Weekly Market Outlook 11.28.14

(Editors Note: We got this Friday from Larry. Enjoy) The stock market, as measured by the Standard & Poor’s 500 Index ($SPX) continues to march upward at a dizzying pace.  The market is overbought, and if $SPX violates support at 2060, we could finally see a correction. Equity-only put-call ratios remain on buy signals.  You […]

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Oil & Dollar At Crucial Long-Term Areas – Weekly Market Outlook

While the release of the Federal Reserve’s meeting minutes on Wednesday of last week was supposed to be catalytic, the market seemed a little disappointed – and disinterested – in the fact that Janet Yellen and her cohorts didn’t really say much (or decide much) of anything during last month’s gathering.  It wasn’t until Friday’s […]

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Small, But Growing, Reasons To Be Concerned Here – Weekly Market Outlook

Stocks may have technically made a fourth straight weekly gain last week, but the real story was the incredibly quiet, flat market action.  We’ll delve into overall stock market index analysis, and some factors that have us concerned despite the overall bullish trend momentum picture, after we take a look at the recent and upcoming […]

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The Week in Russell 2000 and Nasdaq-100 Volatility – 11/3 – 11/7

I’m going to start with the Nasdaq-100 because I have a lot more to say about Russell 2000 volatility this week. VXN was down about 6% despite the underlying market rising only a little last week. This is one of those time periods where VXN and RVX both appear to take the lead from VIX more than in reaction to […]

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Dividend Play in Apple Marks the End of the Golden Goose

Apple options have led single stocks for several years now, with recent average daily volume near one million contracts and 9.5million contracts of open interest – a full 7.4% of single-stock total OI. On many days nearly 10% of all the single stock flow is in AAPL- leaving the other 3693 listings in the dust! […]

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Calculating the New VIX—the Easy Part

The movements of the CBOE’s VIX® are often confusing.  It usually moves the opposite direction of the S&P 500 but not always.  On Fridays the VIX tends to sag and on Mondays it often climbs because S&P 500 (SPX) option traders are adjusting prices to mitigate value distortions caused by the weekend. In addition to these market driven eccentricities the […]

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Will The Bounce Have Legs? – Weekly Market Outlook

Although the market technically lost ground last week, between Wednesday’s and Thursday’s back-to-back intraday reversal bars and Friday’s strong bullish follow-through, stocks ended the week on such a positive note that it’s tough not to be at least a little bullish now.  And, given that all big trends start out as small ones, Friday’s bullish […]

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Weekly Market Commentary 10.10.14

The stock market has become extremely volatile, trading up and down hundreds of Dow Jones points in a day. But our indicators have remained steadfastly bearish throughout the last few weeks. For example, despite several big rally days, $SPX never broke the downtrend line that connects its series of lower highs. Until that downtrend is […]

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Do Options Dream of Dancing Underliers?

While doing simulations on volatility and the square root of time I started thinking about what kind of time options experience—calendar time, market time, or something in-between. The CBOE’s VIX® calculations use calendar time, a 365 day year, but most option gurus recommend using a 252 day year for volatility calculations—the typical number of trading […]

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Strong Long-Term Performance for CBOE’s BXY and PUT Indexes

Can index-option-writing strategies have relatively strong performance even when the VIX has dipped below the 16 level?  As shown in charts below, over the past quarter-century both CBOE S&P 500 PutWrite Index (PUT) and CBOE S&P 500 2% OTM Buy-Write Index (BXY) have had relatively strong returns and lower volatility when compared to some key […]

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Warning Alarm Or Healthy Pullback? – Weekly Market Outlook 9.29.14

The BigTrends TrendScore is a daily reading on the bullish/ bearish level of various market assets – it uses the S&P 500 Index (SPX) (SPY) as a proxy for the broad market.  The SPY Trend-Score fell out of the bullish range for the first time since early/mid August on last Thursday, but did close back into bullish territory on Friday. To some […]

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Weekly Market Commentary 9.26.14

$SPX broke below the bottom of the previous trading range). That is, $SPX closed well below the previous support in the 1978-1985 area. If it can close below 1978 again today, that would confirm the downside breakout and would generate a confirmed sell signal for the intermediate-term. Equity-only put-call ratios have been on sell signals […]

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Long-Term Uptrend Remains Intact – Weekly Market Outlook

While Friday wasn’t a particularly great day for stocks, the week itself was a winner on the heels a Goldilocks assessment from Janet Yellen and her cohorts at the Federal Reserve.  While the economy isn’t yet strong enough to end the bond-buying program cold turkey, it’s also not weak enough that the Fed doesn’t see […]

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Weekly Market Commentary 9.12.14

The Standard & Poors 500 Index ($SPX) has made repeated new all-time highs — both intraday and closing — over the past three weeks. This action has, of course, resulted in a “bullish” $SPX chart.  The bears have made several attempts to sell the market intraday, but each time it seems to quickly regain strength […]

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Walking The High Wire: Weekly Market Outlook 9.8.14

The bulls appear to be in charge, judging from Friday’s bullish kick… bullishness that formed despite a lethargic week and despite the fact that stocks are still overbought from August’s big runup.  Yet, being bearish or bullish at this point isn’t just a matter of taking the market’s current temperature. The upside and downside for […]

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Avoid Overexuberance As September Begins – Weekly Market Outlook

Although it was a low volume week, the bulls clearly outnumbered the bears last week.  The S&P 500 (SPX) (SPY) managed to close at a record high close on Friday after hitting a record intraday-high on Thursday.  Well supported or not, the momentum continues to carry us higher. The advent of a new month against the […]

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Weekly Market Commentary 8.22.14

The rally that began on August 8th has extended quickly and strongly to take $SPX to new intraday and closing all-time highs.  When it crossed over resistance at 1960, the $SPX chart improved from “bearish” to “neutral.”  If another all-time closing high is registered today, that will officially make the $SPX chart “bullish.” Equity-only put-call […]

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12 Key Stats Re: VIX Index

In the recent August 16 Striking Price column in Barron’s, Steven Sears authored a piece entitled “A New Vision of VIX” that noted –  “Over the past 21 years, the CBOE Volatility Index, or VIX, has emerged as one of Wall Street’s most watched sentiment indicators. …Krag “Buzz” Gregory, a Goldman strategist, found that U.S. […]

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Walking A Fine Line Here – Weekly Market Outlook

In retrospect, last week’s bounce wasn’t have been a total surprise.  Most of the market’s major indices were approaching major support levels, as we’ve previously discussed.  Will the momentum continue or will the bearish volatility return? We’ll look into that, right after a quick look at all of last week’s and this week’s economic numbers. […]

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This Week in CBOE Strategy Indexes – 8/15/2014

This past Friday was expiration date for old school standard option contracts. Expiration also means it was the day to retire August contracts and roll into September SPX option positions in the various strategy indexes quoted by CBOE. August SPX settlement came in at 1963.31. BXM was short the SPX Aug 1975 Call and BXY […]

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Weekly Market Commentary 8.15.14

After an ugly day on Thursday, August 7th, followed by a further decline of 13 $SPX points during the overnight session, stocks have rallied steadily.  Most observers are saying that the correction is over and that the bulls are back in charge.  That may be true, but the evidence is not completely in favor of […]

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Weekly Market Commentary 8.8.14

The $SPX chart remains bearish after having broken down through 1950. $SPX sliced right through the next support level at 1925, and after temporarily holding at 1915, appears ready to test the major support level at 1900. Equity-only put-call ratios remain on sell signals. They are both rising steadily, and as long as they are […]

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CBOE Launches New S&P 500 End-Of-Month Options

Following up on an earlier CBOE Blog, CBOE recently launched the new, and long anticipated, S&P 500® End-of-Month Options. The introduction of these options stemmed from requests by asset managers who wanted an SPX option expiration that more precisely coincided with their end-of-month fund cycles and performance periods. To date the launch has been very […]

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Valuation Trepidation – Weekly Market Outlook

Ouch.  Not that traders didn’t have an inkling the market was overbought and perhaps poised for stumble, but few saw coming the suddenness and size of Thursday’s drubbing.  However it materialized, we have no choice but to at least entertain the possibility that this is the beginning of a much more significant pullback. We’ll slice […]

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VXST Futures and VIX Index Both Rose More Than 26% Today

In a July 26 piece that now looks as if it could be rather prescient, in last weekend’s Barron’s, Steve Sears wrote – “BlackRock, the world’s largest asset-management firm, is telling clients that equity-options volatility is now the last cheap asset class in the financial market. With the CBOE Volatility Index (VIX) at about 11.50, […]