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Lawrence G. McMillan

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Oct. 23, 2021, 2:46 p.m. EDT

This key stock-market indicator has switched to a ‘buy’ signal

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By Lawrence G. McMillan

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New recommendation: Trading-range trade

This is an aggressive strategy to trade the top of what might be a trading range. If it does prove to be the case that SPX is in a trading range, we will exit these spreads as the gaps on the downside are filled. However, if SPX moves decisively to a new all-time high, then we will be stopped out for a loss, and we are then going to reverse and go long.

Buy 3 SPY Nov (19) at-the-money puts

And sell 3 SPY Nov (19) puts with a striking price 20 points lower.

Follow-up: Sell one spread each time a gap is filled on the SPX chart, even if it is filled intraday.

            Sell 1 spread if SPX trades at 4488;

            Sell 1 spread if SPX trades at 4439;

            Sell 1 spread if SPX trades at 4372.

Otherwise, if SPX closes above 4545 for two consecutive days, we are going to reverse to the long side: exit all (remaining) put spreads and go long: Buy 2 SPY Nov (19) at-the-money calls.

New recommendation: CyrusOne

CyrusOne /zigman2/quotes/208989003/composite CONE -0.12% has been a takeover rumor from time to time, and the rumors are strong again now. The stock has recently moved sharply higher, with very strong stock volume patterns and heavy call option volume.

Buy 2 CONE Nov (19) 80 calls

At a price of 3.60 or less.

CONE: 81.50 Nov (19) 80 calls. 3.60 offered

We will hold without a stop, while these rumors are circulating.

Follow-up action

All stops are mental closing stops unless otherwise noted.

Long 1 SPY Nov (19) 430 put and short 1 SPY Nov (19) 405 put: A spread was bought in line with the equity-only put-call ratio sell signals and then rolled out to this spread. Those put-call ratio signals have now rolled over to buy signals, so sell this spread and exit the position completely.

Long 3 LDOS Nov (19) 100 calls: These calls were bought and then rolled, in line with a weighted put-call ratio buy signal for Leidos /zigman2/quotes/202902477/composite LDOS -0.95% , which is still in effect. Continue to hold as long as the put-call ratio buy signal is in place.

Long 3 PCAR Nov (19) 85 calls: These calls were bought and then rolled, in line with a weighted put-call ratio buy signal for Paccar /zigman2/quotes/207923670/composite PCAR -0.80% , which is still in effect. Continue to hold as long as the put-call ratio buy signal is in place.

Long 1 SPY Oct (29) 443 calls and short 1 SPY Oct (29) 456 call: This spread was bought on Sept. 23, when SPX closed above 4430. This is the McMillan Volatility Band (MVB) buy signal. It will remain in effect until SPX trades at either of the +/-4σ bands. Touching the +4σ Band would complete the signal, and the spread should be closed. Closing below the -4σ Band would stop out the trade but would eventually set up another buy signal.

Long 1 SPY Oct (29) 434 call and short 1 SPY Oct (29) 446 call: This spread was bought on the VIX “spike peak” buy signal of Oct. 1. Roll the spread now: sell the spread you own and replace it with an equal number of outright long SPY Oct (29) 451 calls. The buy signal will be in effect for 22 days or until VIX re-enters “spiking mode” (a gain of at least 3.00 VIX points over any one-, two- or three-day period, using closing prices). If it does re-enter “spiking mode,” that would set up yet another “spike peak” buy signal as soon as the next spike is completed.

Long 4 EVH Nov (19) 30 calls: The takeover talks are supposedly still going on here, but Evolent Health /zigman2/quotes/207127728/composite EVH -2.72% has not really recovered from the decline on Oct. 13.

Long 2 ADP Nov (19) 210 calls: Continue to hold as along as the put-call ratio buy signal is still in effect.

Long 2 NKE Nov (19) 155 calls: Continue to hold as long as the put-call ratio buy signal is still in effect.

Long 4 CCJ Dec (17) 26 calls: Stop yourself out on a close below 23.

Send questions to: lmcmillan@optionstrategist.com . Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of the bestselling book “.”

<STRONG>Disclaimer:</STRONG> ©McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.

/zigman2/quotes/208989003/composite
US : U.S.: Nasdaq
$ 88.97
-0.11 -0.12%
Volume: 4.21M
Jan. 21, 2022 4:00p
P/E Ratio
210.78
Dividend Yield
2.34%
Market Cap
$11.51 billion
Rev. per Employee
$2.62M
loading...
/zigman2/quotes/202902477/composite
US : U.S.: NYSE
$ 92.18
-0.88 -0.95%
Volume: 704,287
Jan. 21, 2022 4:02p
P/E Ratio
17.05
Dividend Yield
1.56%
Market Cap
$12.94 billion
Rev. per Employee
$346,103
loading...
/zigman2/quotes/207923670/composite
US : U.S.: Nasdaq
$ 91.56
-0.74 -0.80%
Volume: 1.82M
Jan. 21, 2022 4:00p
P/E Ratio
18.26
Dividend Yield
1.49%
Market Cap
$31.79 billion
Rev. per Employee
$862,996
loading...
/zigman2/quotes/207127728/composite
US : U.S.: NYSE
$ 22.14
-0.62 -2.72%
Volume: 547,842
Jan. 21, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.98 billion
Rev. per Employee
$321,214
loading...

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