This new S&P 500 buy signal gives you another reason to stay bullish about stocks

By Lawrence G. McMillan

NYSE new highs overtake new lows, and there's activity in Akamai and Walgreens shares

The S&P 500 index SPX continues to rise, setting all-time highs on both an intraday and closing basis. This alone makes the SPX chart bullish and dictates holding a "core" bullish position.

There are several support levels beneath the market as it has worked its way up in a stairstep fashion: 5,450; 5,380; and 5,260.

SPX is now trading above its +4<SIGMA> "modified Bollinger Band" (Mbb) again. That means that the previous "classic" mBB sell signal is stopped out. We don't trade those. It also means that the whole process necessary to possibly generate a McMillan Volatility Band (MVB) sell signal has to begin over again. The first step would be for SPX to close below its +3<SIGMA> Band, but then it would have to follow through on that in order to confirm an MVB sell signal. This process can take some time.

Equity-only put-call ratios are still on buy signals. The ratios are near the lower regions of their charts, meaning that they are overbought, but they would need to begin to rise sharply in order to generate sell signals.

Breadth has been just strong enough to keep the breadth oscillators on buy signals. There is still a negative divergence between SPX and breadth. However, cumulative volume breadth (CVB) has erased its negative divergence with SPX, as both CVB and SPX are making all-time highs together once again. This is a strong positive development for the overall market.

New highs on the NYSE numbered more than 100 on July 3 and again on July 5, triggering a new buy signal for this indicator.

VIX VIX is also subdued, which means that the trend of VIX buy signal remains in place. As long as VIX remains below its 200-day moving average, it is not a problem for stocks.

The construct of volatility derivatives remains positive for the stock market, since the term structures continue to slope upward.

In summary, we are maintaining a "core" bullish position and will continue to trade any other confirmed signals around that "core" position.

New recommendations: New buy signal

On both July 3 and July 5, new highs on the NYSE numbered more than 100 and also outnumbered new lows, triggering a new buy signal.

Buy 1 SPY SPY (Aug 16) at-the-money call and sell 1 SPY (Aug 16) call with a striking price 15 points higher. Stop out this position if NYSE new lows outnumber new highs for two consecutive days.

New recommendations: Akamai Technologies (AKAM)

There has been a new put-call ratio buy signal in AKAM (AKAM). Buy 2 AKAM (Sept 20) 90 calls in line with the market.

As usual, we will hold these calls as long as the weighted put-call ratio for AKAM remains on a buy signal.

New recommendation: Walgreens Boots Alliance (WBA)

This a longer-term potential buy signal from Walgreens Boots Alliance (WBA). We are keeping this recommendation open but will not continue to reprint the reasoning behind the trade, other than to say that stocks that have been removed from the Dow Jones Industrial Average DJIA usually experience a strong rally within weeks after that removal. WBA was obliterated after its latest earnings report. The potential MVB buy signal was canceled. So, we are adjusting our entry points:

If WBA closes above 13.10, then buy 2 WBA (Aug 9) 13 calls in line with the market.

Follow-up action:

All stops are mental closing stops unless otherwise noted.

We are using a "standard" rolling procedure for our SPY spreads: In any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

Long 0 RSI (RSI) (July 19) 10 calls: These calls were stopped out on July 2, when RSI closed below 9.10.

Long 0 BL (BL) (July 19) 45 puts: We rolled to these puts at June expiration, but then they were stopped out on June 28, when BL closed above 47.50.

Long 3 INSG (INSG) (June 21) 9 calls: Raise the trailing, closing stop to 10.00.

Long 1 expiring SPY (July 5) 547 call: This is our "core" bullish position. Roll to the July 26 at-the-money call.

Long 5 CORZ (CORZ) (July 19) 7 calls: Raise the trailing stop to 8.10.

Long 4 INOD (INOD) (July 19) 16 calls: Raise the trailing stop to 14.10.

Long 2 FIVE (FIVE) (July 19) 115 puts: Roll to the July (19th) 105 puts.

Long 2 NKE (NKE) (Oct 18) 95 puts: Roll to the (Oct 18) 75 puts. We will hold as long as the put-call ratio for NKE remains on a sell signal.

All stops are mental closing stops unless otherwise noted.

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 "Options As A Strategic Investment." www.optionstrategist.com

(c)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.

-Lawrence G. McMillan

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07-06-24 0740ET

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