Technical Analysis & Charts Archives - CBOE Blogs

  • Market News | Technical Analysis & Charts | VIX | Strategy | Feb 16, 2016, 12:21 PM

    What to do When a Stock Crashes

    What to do When a Stock Crashes

    Recently we saw some epic declines of individual stocks after posting shaky earnings reports.  Topping the list was long-time growth name LinkedIn (LNKD), the social networking giant who saw its market value nearly cut in half after reporting weak forward guidance.  Tableau Software (DATA) had it even worse, falling nearly 50% on the same day.  We also witnessed other stocks with smaller but still significant declines (Hanes Brands, HBI and Outerwall, OUTR). This big money selling[...]

  • Technical Analysis & Charts | VIX | Futures | Feb 16, 2016, 9:59 AM

    BigTrends.com Weekly Market Outlook - Time Frames, Volume, Earnings

    BigTrends.com Weekly Market Outlook - Time Frames, Volume, Earnings

    As has been the case for a while, the market threw investors another curveball last week. That is, stocks initially acted as if they were finally going to tip over the edge of the cliff, but right before they reached the point of no return they bounced back just enough to offer a glimmer of hope. As encouraging as Friday's strong bounce was (and the pre-open strength on Tuesday is), the fact of the matter is, we're technically still closer to the aforementioned breakdown than we are to a rebound. [...]

  • Is VIX Approaching a Death Cross?

    Is VIX Approaching a Death Cross?

    I began my week updating charts and tables as I am heading to Tampa, FL to speak on options and then I’m off to Trader’s Expo in New York to deliver a couple of presentations.  The chart below, depicting the rolling 1 year and 5 year average closing prices for VIX is a favorite of mine.  I consider it a good depiction of the equity market shifting from a low to high volatility regime as the 1 year average approaches the 5 year average.  However, I noticed today that the[...]

  • Technical Analysis & Charts | Feb 8, 2016, 4:44 PM

    One Size Doesn’t Fit All

    One Size Doesn’t Fit All

    When shopping for shoes there’s a need to know what size to purchase or I suppose one could say whatever comes close. Performances between the U.S. small-cap and large-cap indexes have been quite different so far in 2016.  The small-cap as measured by the Russell 2000® Index (RUT) is down -14.66% compared to the large-cap S&P 500 Index -9.32% (based on closing prices 2/8/16). RUT’s daily moves have been over 1.00% almost two-thirds of the trading days as illustrated below. Managing[...]

  • Market News | Technical Analysis & Charts | VIX | Futures | Strategy | Feb 8, 2016, 10:15 AM

    BigTrends.com Weekly Market Outlook - Hanging By A Thread?

    BigTrends.com Weekly Market Outlook - Hanging By A Thread?

    Although stocks were never significantly into profitable territory at any point last week, at the very least on Thursday it looked like we might stabilize with just a very minor loss.  The bears had other plans on Friday, however, sending the market 1.85% lower that day to the lowest close in nearly two weeks. And yet, it's worth noting that neither the S&P 500 (SPX) (SPY) nor the NASDAQ Composite (COMP) broke under their most critical floors; we're still not past the point of no return[...]

  • Market News | Technical Analysis & Charts | VIX | Trader Talk | Jan 29, 2016, 1:37 PM

    Weekly Stock Market Commentary 1/29/16

    Weekly Stock Market Commentary 1/29/16

    The market has finally stabilized to some extent.  Even though $SPX had wide swings in the past week, there was a net gain over the past five trading days. There is strong support at 1820 (see Figure 1), because that is where this January's decline halted, and where the declines of April and October 2014 also halted.   A breach of that area would be quite negative. Equity-only put-call ratios remain on sell signals.  There have been some attempts by the computer analysis programs[...]

  • Paper by Professor Bondarenko Has Intriguing New Analysis of the Premiums, Returns and Volatility of PUT and WPUT Indexes

    Paper by Professor Bondarenko Has Intriguing New Analysis of the Premiums, Returns and Volatility of PUT and WPUT Indexes

    A new 10-page study examines both the CBOE S&P 500 PutWrite Index (PUT) and the CBOE S&P 500 One-Week PutWrite Index (WPUT), comparing their performances with that of traditional benchmark stock and bond indexes. This is the first comprehensive published study that examines the performance of a benchmark strategy index that incorporates WeeklysSM options. Written by Oleg Bondarenko, professor of finance at the University of Illinois at Chicago, the study -- “An Analysis of Index Option[...]

  • Market News | Technical Analysis & Charts | VIX | Strategy | Jan 25, 2016, 9:57 AM

    Weekly Market Outlook - Reasons To Be Optimistic Here

    Weekly Market Outlook - Reasons To Be Optimistic Here

    After a scary start to the shortened trading week, Wednesday's intraday turnaround followed-through quite nicely all the way to the end of Friday's trading. By the time the closing bell rang that day, the S&P 500 (SPX) (SPY) had gained 1.4% after being down as much as 3.6% at one point on Wednesday. Better still, there's room for the market to keep rising. It's still too soon to say this is the beginning of what will be a prolonged rally; there remains an entanglement of resistance lines[...]

  • Weekly Review - Russell 2000 Index and Options - 1/18 - 1/22

    Weekly Review - Russell 2000 Index and Options - 1/18 - 1/22

    Investors got a slight reprieve from what has been a difficult start to the year as both the Russell 1000 (RUI) and Russell 2000 (RUT) rose last week.  RUI gained 1.36% while the small cap focused RUT was up by 1.28%.  There has been nowhere to hide in 2016, but large cap stocks have held up pretty well versus small caps.  RUI is down just over 7% in 2016 while RUT is down a little more than 10%.  The chart below indexes RUI and RUT to 100 as of December 31st 2015 for comparison’s[...]

  • Market News | Technical Analysis & Charts | Strategy | Jan 22, 2016, 6:00 PM

    Weekly Stock Market Commentary 1/22/16

    Weekly Stock Market Commentary 1/22/16

    Stocks remain under extreme pressure, but it finally looks like the oversold conditions are starting to have some effect. An oversold rally is now underway. You can see, in Figure 1, that $SPX bounced off the support level at 1820. That level was also the low of both April and October 2014. In essence, nearly two years of gains -- back to April 2014 -- had been wiped out at Wednesday's lows. By the time $SPX reached those levels, the oversold conditions were myriad, and a rally has ensued. We expect[...]

  • Technical Analysis & Charts | Futures | Jan 21, 2016, 4:20 PM

    European Bear Markets - FTSE/CAC/DAX/IBEX

    European Bear Markets - FTSE/CAC/DAX/IBEX

    After yesterday’s waterfall-like selloff, a number of global indices are now in bear market territory (20% off highs). Germany’s DAX benchmark is 24% of April 2015 highs France’s CAC 40, as of yesterday’s close was nearly 22% of 2015 heights The Spanish IBEX is off a full 30% from last April’s highs – Ay, caramba! Yesterday, the Brits joined this ignominious group, with the FTSE 100 losing 3.3% on the day and falling 20.13% from April ’15 highs. While the[...]

  • Market News | Technical Analysis & Charts | VIX | Jan 19, 2016, 11:30 AM

    Market Outlook - Are Stocks Ready To Pivot?

    Market Outlook - Are Stocks Ready To Pivot?

    Despite a couple of valiant efforts from the bulls, there was just nothing that could stop the raging bear last week. By the time the closing bell rang on Friday, the market was off by 2.2% for the week.... most of which came during Friday's selloff. Was that enough to finally drive the market to a meaningful bottom and let stocks start to recover for a while? Most indices are still on the fence, but yes, there are some clues suggesting stocks are ready to pivot. The question is, can we trust those[...]

  • Weekly Review - Russell 2000 Index and Volatility 1/11 - 1/15

    Weekly Review - Russell 2000 Index and Volatility 1/11 - 1/15

    The Chicago Bears are doing the same thing the rest of us did this weekend, watching the playoffs from home.  However, the stock market bears have been dominate in 2016.  Russell 2000 (RUT) history goes back to 1987 so there is not a lot to work with, but the first ten days of 2016 are the worst first ten days on record for RUT.  The table below shows the first ten days for every year when RUT started off in the red followed by what the small cap oriented index did for the balance[...]

  • Caution on Using VIX vs. Oil as a Stock Market Signal

    Caution on Using VIX vs. Oil as a Stock Market Signal

    I awoke this morning to an email from the matriarch of CBOE-TV Holly Goodhart.  She was preparing for her day with CNBC on in the background and something caught her eye.  The following comes directly from her email – I have CNBC on this morning, and they just spent a segment discussing this headline: "Markets bottom when VIX is greater than oil." This didn’t sound right to me for a few reasons, primarily because I recall many years with the price of oil in the teens.[...]

  • A Quick Look at VIX Backwardation Streaks

    A Quick Look at VIX Backwardation Streaks

    When VIX is relatively high the VIX term structure moves into what we commonly refer to as backwardation.  The way this may be defined varies among market participants, but most focus on the shorter end of the VIX curve.  That is what I’ve been doing lately as well.  It turns out, regardless of how you define VIX backwardation 2016 has experienced more instances of it than not for the first ten days of 2016.  The tables below rank the consecutive day streaks for VIX backwardation[...]