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By Lawrence G. McMillan

The most positive thing one can say about the $SPX chart is that the major downtrend lines have been broken, and the gap at 2750 has been filled. Beyond that, the bulls have had to be satisfied with small gains but a failure to penetrate through the resistance at the March highs of 2800. A close above 2800 would be constructive for $SPX, and that should lead to an attempt to make new highs above 2870.

Equity-only put-call ratios remain solidly on buy signals. They are in the lower regions of their charts, so they are getting into overbought territory.

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By Lawrence G. McMillan

The island reversal gap on the $SPX chart was finally filled, at 2750, this past week. That moves the $SPX chart out of "bearish" status, but it is still badly lagging indices that have recently made new all-time highs, such as the NASDAQ Composite and the Russell 2000. Even so, this is a big improvement, for all of the other indicators have retained their bullish status as well.

There is now resistance/targets at 2800 and 2870 (the $SPX all-time highs). Support is at 2740, 2700, and at various levels below that.

Equity-only put-call ratios continue to decline, and thus they remain on buy signals, as does the Total put-call ratio.

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By Lawrence G. McMillan

Stocks just can't seem to get out of their own way. Both bulls and bears have failed to capitalize on what seemingly should have been opportunities. The bottom line is that the $SPX chart is stuck in a sideways trading range until proven otherwise, with resistance at 2750 and support at 2640.

Put-call ratio charts remain bullish. After Tuesday's sharp decline this week, both ratios rose. To the naked eye, it appeared that sell signals might be emerging. But the computer analysis programs never wavered, continuing to insist that the ratios were still on buy signals -- and they are.

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By Lawrence G. McMillan

The Standard & Poors 500 Index ($SPX) is now trapped in a very narrow range, between 2700 and 2740. A breakout above 2750 would be very positive, while a break DOWN below 2630 would be very negative. For most of the rest of the indicators, everything is bullish. But as subscribers know, $SPX is the most important indicator.

For example, the put-call ratios are solidly on buy signals as they continue to fall almost daily.

Market breadth was been decent -- not terrific, but decent. As a result, both breadth oscillators remain on buy signals in modestly overbought territory.

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By Lawrence G. McMillan

A week ago Thursday (May 3rd), the market was on its heels as a large day-long sell program had pushed $SPX below the 200- day Moving Average. A close below that MA would have signaled some dire things for the bulls, but then a reversal rally took hold and it hasn't let go yet. As of yesterday's close, $SPX had rallied 130 points from those intraday lows.

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By Lawrence G. McMillan

A week ago Thursday (May 3rd), the market was on its heels as a large day-long sell program had pushed $SPX below the 200- day Moving Average.  A close below that MA would have signaled some dire things for the bulls, but then a reversal rally took hold   and it hasn't let go yet.  As of yesterday's close, $SPX had rallied 130 points from those intraday lows.

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By Lawrence G. McMillan

As it stands today, the “Short Volatility Trade” has been watered down to a great extent.  Perhaps in an effort to get ahead of the regulators, most of the Exchange Traded Products (ETPs) that deal with “short volatility” have made adjustments so that their products are no longer as volatile as they had previously been.

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By Lawrence G. McMillan

One of things I’ll always remember about the Crash of ‘87 (actually, I’ll always remember everything about the Crash of ‘87 – at least from my vantage point) was that the market was down on Wednesday, Thursday, and Friday of the week before, with Friday being the worst day.  That Friday, October 16th, saw the Dow drop 110 points – the largest point drop in history up to that time.  Of course, Monday was the Crash.  On that Monday, the futures opened down about 20 points (roughly equivalent to 120 points today, by my estimate).    So I learned to respect a market as being potentially extremely bearish if there is a big drop into a closing low on Friday.

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By Lawrence G. McMillan

A week ago it seemed that $SPX had broken out of the "box" that had contained prices for nearly a month (red box in Figure 1) and was set to challenge some resistance levels. That came to an abrupt halt, and $SPX sold off more than 100 points in five trading days. But then, for the nth time, $SPX bounced off the 200-day moving average. A strong rally has ensued.

Even so, the downtrend line and the gap at 2750 represent significant obstacles to any intermediate-term rally. They must be overcome before one can upgrade the status of the $SPX chart.

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By Lawrence G. McMillan

Once again, there are questions surrounding the settlement of the CBOE volatility derivatives on this past Wednesday morning (April 18th).  There was what could be manipulative action on the $VIX settlement.  The day before, $VIX had closed at 15.25, and on Wednesday morning S&P futures were trading slightly higher, so logically $VIX would have been little changed or even lower.  However, on the “a.m.” settlement process for the April $VIX futures, the settlement was at 17.26, up over two points from the previous night’s close and more than two points above where $VIX itself was trading at the time!!  

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