The move prompted an immediate reaction down to 3800, the next support level.
We are closing our positions in the McMillan Volatility Band buy signal that occurred in early October, and we will now wait for a new signal to set up. If SPX were to close below the lower -4σ Band , that would be the first step toward a new buy signal. That does not appear to be imminent. So, the above indicators are relatively negative, but that is contrasted by the CBOE Volatility Index VIX, +19.53% indicators, which are more bullish. The VIX “spike peak” buy signal of December 13th remains in place. Moreover, the trend of VIX buy signal, which is a more intermediate-term signal, remains in place. VIX would have to rise above 26 to cancel out these buy signals.
New recommendation: Santa Claus rally The Santa Claus rally is a term and market seasonal pattern defined by Yale Hirsch over 60 years ago. It has a strong track record. The system is simple: The market rises over the last five trading days of one year and the first two trading days of the next year — a seven-day period.
Long 1 SPY Jan 408 call and short 1 SPY Jan 423 call: this trade is based on the MVB buy signal, which was established on October 4th. We have already rolled up a couple of times and taken some profit out of the position. Close the remaining spread now.Long 2 IWM Jan 185 at-the-money calls and Short 2 IWM Jan 205 calls: this is our position based on the bullish seasonality between Thanksgiving and the second trading day of the new year.
Yeah....I think that bubble has well and truly burst. Gruel for Christmas this year.