• Technical Analysis & Charts | Aug 12, 2015, 3:04 PM

    Strategy: Skip Strike Butterfly Spread

    Strategy: Skip Strike Butterfly Spread

    Let’s look at SPX, IBM and FB to determine which one is the best candidate for a skip strike butterfly. SPX is trading at 2083.56, IBM at 156.32and FB at 95.12. A normal long call butterfly combines a 90-95 bull vertical call spread with a 100-95 bear vertical call spread. Each spread has an equal amount of contracts. The strike price differential is the same for both vertical spreads. A skip strike butterfly combines a 90-95 bull vertical call spread with a 105-95 bear vertical call spread.[...]

  • Market News | Aug 10, 2015, 10:56 AM

    On The Fence - Weekly Market Outlook

    On The Fence - Weekly Market Outlook

    Once again, stocks managed to end the trading week on the fence, pressured lower by bearish momentum, but perking up at a very important support line when push came to shove on Friday. How we begin the new week is uncertain, but in the current market environment even the first move out of the gate isn't necessarily an indication of the trend's true direction. We'll sort it all it below, right after a brief run-down of last week's and this week's major economic news, the biggest of which was obviously[...]

  • Market News | Technical Analysis & Charts | Aug 7, 2015, 11:49 AM

    Weekly Stock Market Commentary 8.7.15

    Weekly Stock Market Commentary 8.7.15

    The stock market continues to hover in its trading range. Despite some promising buy signals from sentiment extremes in put-call ratios and $VIX, there was no follow-through by the Standard & Poors 500 Index ($SPX). We have often said -- and still maintain -- that price is the most important indicator. Regardless, as long as $SPX remains in the broad 2040-2135 trading range, the chart is neutral. Equity-only put-call ratios gave buy signals a little over a week ago, and they remain strongly on[...]

  • Market News | Aug 3, 2015, 10:03 AM

    Choppy Waters - Weekly Market Outlook

    Choppy Waters - Weekly Market Outlook

    The bulls managed to get a nice reversal rally going on Tuesday of last week. But, when push came to shove on Friday, the bulls couldn't follow-through and carry the market meaningfully higher. Though the market finished the week above its key short-term moving averages, it also finished the week pointing in a bearish direction. Maybe it was just a bad day. Maybe the market will rekindle last week's jump-started rally early on this week and make a run for new highs. (There's certainly room and some[...]

  • Education | Trade Ideas | Aug 3, 2015, 8:08 AM

    SPX Version of SPY Hedge from Barron's

    SPX Version of SPY Hedge from Barron's

    Over the weekend, there was a discussion of hedging portfolios with options in my favorite column, The Striking Price, which appears every weekend in Barron’s. Steve Sears relayed a reader request to Stephen Solaka who manages money for Belmont Capital out in sunny but dry California. The question was basically, “How do I go about hedging a $1 million portfolio if I am concerned about the equity market over the near term?” The response, formulated when the SPY ETF was trading around[...]

  • Market News | Jul 31, 2015, 11:29 AM

    Weekly Stock Market Commentary 7.31.15

    Weekly Stock Market Commentary 7.31.15

    The chart of $SPX is the least bullish of the indicators. SPX remains in the 2040-2135 trading range that has bound it for most of this year. Basically this is a neutral chart. Put-call ratios are much more encouraging. A strong buy signal has been generated by the standard put-call ratio (Figure 2). The weighted equity-only put-call ratio is also bullish (Figure 3). Market breadth remains mixed, with the NYSE-based indicator now on a buy signal, but the "stocks only" is not. Volatility[...]

  • Market News | Jul 28, 2015, 12:25 PM

    Markets Feel Normal Again (Maybe)

    Markets Feel Normal Again (Maybe)

    Though we had four down sessions this past week and drop of 2% for the SPX 500, the action had a more normal feel to it.  What am I talking about?  First and foremost, it was nice for a change the market sentiment was not being driven by Greece.  Since mid-June that has been the case, the unpredictability over a resolution has gripped investors/traders in a panic.  When payment deadlines for Greece passed it was all but assumed the worst would happen and volatility shot through[...]

  • Market News | Jul 27, 2015, 11:22 AM

    Where Is The Floor? - Weekly Market Outlook

    Where Is The Floor? - Weekly Market Outlook

    Once the bearish ball got rolling last week, it got rolling in spades. In retrospect, however, the pullback makes sense in terms of when, where, and why. The S&P 500 (SPX) (SPY) as well as the NASDAQ Composite (COMP) both bumped into major technical ceilings, and right on cue, began a retreat that likely isn't over yet. We'll dissect the breakdown below, as always. First though, we need to run down last week's and this week's key economic numbers. Economic Data Though a light week in terms of[...]

  • Market News | Jul 24, 2015, 12:07 PM

    Weekly Stock Market Commentary - 7.24.15

    Weekly Stock Market Commentary - 7.24.15

    $SPX now appears to failing at the top of the range, thereby remaining within the 2040 - 2135 trading range. Hence, the $SPX chart remains neutral as long as it's in that trading range. Put-call ratios are mixed, but generally are in an oversold state. The standard ratio continues to rise and is thus on a sell signal.  The weighted ratio, however, has rolled over to a buy signal. Market breadth has been poor lately, and that has caused some concern.  Both ratios have now reached an oversold[...]

  • Education | Jul 23, 2015, 4:00 PM

    VIX Futures Spread: A Favorite Tool for Picking Bottoms of S&P-500 Cash Index

    VIX Futures Spread: A Favorite Tool for Picking Bottoms of S&P-500 Cash Index

    As the S&P-500 Cash Index (SPX) has become the de-facto benchmark for the US equity markets (DJIA belongs to the abacus era), picking tops and bottoms of the SPX has become a favorite of many market timers. As we all know, volatility at market tops tend to be relatively low, while at the bottoms it tends to spike. Taking that information and turning it into a time series provides a reasonable quantitative tool with which we can reliably pick bottoms—and perhaps also tops—in SPX within[...]

  • Market News | Education | Jul 21, 2015, 2:09 PM

    VIX Near the Bottom?

    VIX Near the Bottom?

    The VIX has a highly negative correlation to the SPX. The VIX is priced upon the time value that is embedded in the premium of SPX options. When stocks fall they usually move much more rapidly to the downside than they move to the upside. As the stocks fall investors rush  to scoop up puts that provide downside protection or grabbing calls should there be a correction. Insurance for a beachside cottage is much more expensive when a hurricane hits ten miles offshore than when there hasn’t[...]

  • Market News | Jul 20, 2015, 10:37 AM

    Bullish Technical Indicators, Dollar & Gold - Weekly Market Outlook

    Bullish Technical Indicators, Dollar & Gold - Weekly Market Outlook

    With a possible end (more or less) to the Greek debt crisis taking shape last week, investors were once again confident enough to get back to their buying ways. When it was all said and done, the market gained about 2.4%, crawling back above some key resistance levels in the process. And yet, stocks didn't quite clear their biggest hurdles, and in rare cases where the indices managed to make good technical progress, they ran into other walls. In other words, there are still several ways from[...]

  • Market News | Jul 17, 2015, 12:18 PM

    Weekly Stock Market Commentary - 7/17/15

    Weekly Stock Market Commentary - 7/17/15

    The oversold conditions that existed last week generated a strong week-long rally. The move above 2100 was constructive, but the chart won't really turn bullish until new highs are made and held.That would require a move above 2135. Put buying has remained relatively heavy, despite the rally. As a result, the equity-only put-call ratios remain in an uptrend and thus remain on sell signals. Currently both breadth oscillators are clinging to buy signals. During this rally, we have literally seen a[...]

  • Market News | Education | Jul 14, 2015, 1:25 PM

    Comparing S&P 500 and MSCI EAFE Performance

    Comparing S&P 500 and MSCI EAFE Performance

    CBOE launched option trading on the MSCI EAFE (MXEA) index a couple of months ago. MXEA represents the performance of developed equity markets outside of the United States. There are over 900 stocks contributing to the index that cover over 20 different developed countries. As a former spread trader I always like to take a look at the performance of similar markets. Today I’m going to cover the relationship between MXEA and the S&P 500 (SPX). We have data going back to January 2000 so the[...]

  • Market News | Jul 13, 2015, 11:50 AM

    Back From The Brink - Weekly Market Outlook

    Back From The Brink - Weekly Market Outlook

    Once again, just when it looked like stocks were going to pass the point of no return, good news regarding Greece's debt day the bulls a reason to celebrate on Friday. It wasn't enough to bring the market back into the black for the week, but just barely.  More important, Friday's bounce gave investors just enough hope to keep the bullish case alive for some. We'll look at everything below, as usual, but let's first run down some key economic numbers. Economic Data There wasn't much in[...]

Special Offers
*Third Party Advertisements

Advertisement Advertisement