MW It's full-speed ahead for stocks going into next week's Fed meeting

By Lawrence G. McMillan

But remember the old saying: 'Buy the rumor, sell the news'

The S&P 500 index SPX has made new all-time highs again this week, and this keeps the chart of SPX looking positive. There is now support at roughly 6,500 (the August highs), 6,340-6,360 (the August lows), and 6,200 (the July lows).

The SPX chart is certainly bullish heading into the Federal Reserve meeting on Sept. 17 - but don't forget the old saying: "buy the rumor, sell the news." The market anticipates good news and rises into it, but once the news is out, profits are sometimes taken.

Not every indicator that we follow is bullish, though most are. One negative indicator is the McMillan volatility band (MVB) sell signal that is still in place (green "S" on the SPX chart above). That would be stopped out if SPX were to close above the +4<SIGMA> band, which is currently near 6,600 and moving sideways.

Equity-only put-call ratios rolled over to buy signals in the past week. Now, both ratios are declining once again; as long as that is the case, it is bullish for stocks.

Market breadth has not expanded even as the S&P 500 makes all-time highs

Market breadth is problematic. Even though SPX has made all-time highs, breadth is negative and the breadth oscillators are back on sell signals; this is true for both the "stocks only" data and the NYSE data. They have flipped back and forth several times in recent weeks, but the bottom line is that breadth has not expanded even as SPX makes all-time highs. That is a sign of negative divergence.

Countering this to some extent is that cumulative volume breadth (CVB) has been making all-time highs this week - at least in stocks-only terms. That is confirmation of the new highs by SPX. In NYSE terms, CVB has not quite reached all-time highs since last Friday, but it is not far from it.

On the NYSE, new highs continue to dominate new lows on a daily basis. That fact keeps this indicator bullish, and it will continue to be on a buy signal unless new lows outnumber new highs for two consecutive days on the NYSE.

There has been a sell signal in place from realized volatility for a while now. The 20-day historical volatility of SPX (HV20) rose from a low of 6% to 12%. However, that sell signal will be stopped out if HV20 falls back to 8% or lower; it's now at 9%, so this signal is definitely waning.

Implied volatility, on the other hand, has been bullish for stocks. Currently, with VIX VIX near 15, the trend of VIX buy signal (pink "B" on the accompanying VIX chart) remains in place. Trouble would occur if VIX were to begin to rise - particularly if it returned to "spiking" mode and if it were to close above its 200-day moving average (currently near 19).

The construct of volatility derivatives has steadfastly remained bullish for stocks, too. The term structures of the Cboe volatility indices and of the VIX futures continue to slope steeply upwards. Also, there is a healthy premium on the VIX futures.

We remain bullish, in line with the most important indicator: the SPX chart. We will trade other confirmed signals as they occur, and we continue to recommend rolling deeply in-the-money positions.

New recommendation: Corn futures $(CORN)$

This is the first of three conditional recommendations based on current put-call ratio signals.

There has been a buy signal in corn futures (C00), and that buy signal is based on the futures options that trade on the CBOT. However, one does not have to trade futures options in order to try to take advantage of this signal, since there is an ETF that tracks the price of corn: CORN.

If CORN closes above $17.75, then buy 10 CORN Nov (21st) 17 calls in line with the market.

We had a buy signal in CORN last April, which didn't work out, but the longer-term track record for Corn is positive as far as put-call ratio signals are concerned.

New recommendation: Fortinet $(FTNT)$

There is a new weighted put-call ratio buy signal in FTNT (FTNT).

If FTNT closes above $82, then buy 2 FTNT Oct (17th) 80 calls in line with the market.

New recommendation: Nike $(NKE)$ puts

There's a new sell signal based on put-call ratios in NKE (NKE).

If NKE closes below $73, then buy 2 NKE Nov (21st) 72.5 puts in line with the market.

Market insight: Notable earnings

Oracle $(ORCL)$ produced one of the largest post-earnings jumps the stock market has seen in a while. This came after ORCL presented an aggressive outlook for its AI-related business. Prior to the announcement, the at-the-money straddle was priced at 10% of the stock price - right in the middle of the prior 10 post-earnings moves, making it a seeming toss-up as to whether to buy it or not. Obviously, with ORCL up 32% at the close of the day after the earnings (and higher intraday), that straddle was a buy.

Follow-up actions:

All stops are mental closing stops unless otherwise noted.

We are using a standard rolling procedure for our SPY 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.

Also, for outright long options, roll if they become 8 points in-the-money.

Long 2 APH (Sept. 19) 120 calls: The calls were rolled up when APH $(APH)$ traded at $120 on September 10. Raise the closing stop to 110.

Long 1 TSEM $(TSEM)$ (Sept. 19) 60 call: Continue to hold.

Long 1 SPY (Sept. 26) 645 call and short 1 SPY (Sep. 26) 665 call: This position is the trend of VIX buy signal. Stop out if VIX closes above 19 for two consecutive days.

Long 5 SVXY SVXY (Sept. 19) 47 calls: We monitor the weighted VIX futures premium via a proprietary calculation. Specifically, the calculation is currently at 2.34. This trade would be stopped out if it drops to 0.50 or lower. We will update the calculation weekly.

Long 1 SPY (Sept. 19) 647 call and short 1 SPY (Sept. 19) 660 call: We will hold until new lows outnumber new highs on two consecutive days on the NYSE.

Long 4 ATAI (Sept. 19) 2.5 calls: Stop out if ATAI $(ATAI)$ closes below $4.20.

Long 5 OPEN (Sept. 19) 2.5 calls: The stock jumped higher after a new CEO was hired (after the close on September 10). Roll to the OPEN (Oct. 17) at-the-money calls. Stop out if OPEN $(OPEN)$ closes below $4.80.

Long 1 SPY (Sept. 19) 635 put and short 1 SPY (Sept. 19) 595 put: This position was bought in line with the equity-only put-call ratio sell signals. Those ratios have rolled over to buy signals, so exit this position now.

Long 4 XLF (Nov. 21) 53 calls: We will hold this position as long as the weighted put-call ratio of XLF XLF remains on a buy signal.

Long 1 expiring SPY (Sept. 12) 636 put and short 1 SPY (Sept. 12) 611 put: This is based on the breadth oscillator sell signals. As noted in the market commentary above, the breadth oscillators have not been able to sustain either a buy nor a sell signal, but we are going to keep this position open through the FOMC meeting: Sell this spread and replace it with: Buy 1 SPY (Sept. 26) 636 put.

Long 6 PPL (Oct. 17) 37 calls: Sell these PPL $(PPL)$ calls now, since the put-call ratio has rolled back over to a sell signal.

Long 4 LUV (Oct. 17) 32.5 calls: As usual, we will hold these calls as long as the put-call ratio chart for LUV $(LUV)$ is on a buy signal.

Long 2 SPLG (Oct. 17) 76 straddles: Initially, we will hold without a stop, but we intend to risk a maximum of about half the straddle price. Meanwhile, if the underlying trades at either three points higher or three points lower, then roll that side. For example, if SPLG SPLG trades up to $79, then roll the October 76 calls up to the October 79 calls; or if it trades down to 73, then roll the puts down.

Long 1 GLD (Nov. 21) 326 call and short 1 GLD (Nov. 21) 343 call: Roll both sides up 17 points if GLD GLD trades at $343 at any time. Meanwhile, we will hold a long position as long as the weighted put-call ratio for GLD remains on a buy signal.

Long 1 NVDA $(NVDA)$ (Nov. 21) 170 put and short 1 NVDA (Nov. 21) 145 put: We will hold this position as long as the weighted put-call ratio for NVDA 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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September 11, 2025 14:49 ET (18:49 GMT)

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