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The McMillan Options Strategist Weekly
By Lawrence G. McMillan | Published  07/15/2011 | Options | Unrated
The McMillan Options Strategist Weekly

The market action this week has been quite bearish and, frankly, quite out of character in terms of the indicators, but it may also be a rather severe reaction to the overbought conditions that had built up.

The S&P 500 Index ($SPX) had strong upside momentum a week ago, but ran into resistance very near the April highs.




Equity-only put-call ratios are bullish and have remained bullish even during this week's decline.



Breadth was extremely strong on the way up, and has been extremely negative on the way down.


$VIX actually closed below 16 (barely) last week, and once again that was a harbinger of a market selloff. Now $VIX is shooting upward, reaching above 21 today.



In summary, we remain bullish as long as $SPX continues to close above 1300 - based on the put-call ratio buy signals, at least. A close below there would make us neutral, relegating the index to trading range status.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.