The S&P 500 stock market index is holding the line

The stock index is holding the line so far.

spx spy technical analysis trend following asymmetric risk reward retrun

You can see the percent of S&P 500 stocks trading above their 50 day moving average closed at 30% last week. It’s also testing a low trend, not it is a real trend where buying/selling pressure exists, it’s just a line showing the percent of stocks in short term uptrends are where they were at the May low.

spx percent of stocks above 50 day moving average $SPXA50R

Next, we see the percent of stocks above the longer-term trend closed at 55% last week, the same level as the March and May lows.

$SPXA200R spx percent of stocks above 200 day moving average trend following breadth

CBOE S&P 500 Volatility Index $VIX only dropped -2.77%, which is light, considering the S&P 500 closed up 1.1%.

The options market last Friday showed asymmetry between put buying and call buying with the market favoring puts 144%. Index options seem to be mostly used for hedging.

Individual equity options are more traded for speculation. Put buying was high on individual stocks last Friday, too. You can see the typical range is much lower.

This isn’t advice for anyone as this index cannot be traded directly, but I want to make a point that if I wanted to take a position here to increase explore, I would place my exit just below the red line. The red line is the May and March lows, so if the price trend falls below that, the trend changes from up to down. Lower highs and lower lows is a simple example of a downtrend. I just wanted to point that out as a very simple example of a tactical trade based on the price trend.

spx stop loss

We’ll see how it all unfolds from here.

Mike Shell is the Founder and Chief Investment Officer of Shell Capital Management, LLC, and the portfolio manager of ASYMMETRY® Global Tactical.

Mike Shell and Shell Capital Management, LLC is a registered investment advisor focused on asymmetric risk-reward and absolute return strategies and provides investment advice and portfolio management only to clients with a signed and executed investment management agreement. The observations shared on this website are for general information only and should not be construed as advice to buy or sell any security. Securities reflected are not intended to represent any client holdings or any recommendations made by the firm. Any opinions expressed may change as subsequent conditions change.  Do not make any investment decisions based on such information as it is subject to change. Investing involves risk, including the potential loss of principal an investor must be willing to bear. Past performance is no guarantee of future results. All information and data is deemed reliable, but is not guaranteed and should be independently verified. The presence of this website on the Internet shall in no direct or indirect way raise an implication that Shell Capital Management, LLC is offering to sell or soliciting to sell advisory services to residents of any state in which the firm is not registered as an investment advisor. Use of this website is subject to its terms and conditions.

 

 

 

 

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