MW These stock traders' charts are signaling the S&P 500's next move

By Lawrence G. McMillan

Tech earnings could be just what the market needs right now

The S&P 500 Index SPX continues to move in fits and starts around the 7,000 level. What's missing is a robust upside breakout that will clear out the stops and make the shorts run for cover.

That could still happen: SPX on Jan. 28 crossed 7,000 for the first time. But the blue horizonal lines on the chart below show each attempt at new highs followed by yet another pullback. If the bulls can get the upper hand, the advance could reach 7,110 (the +4<SIGMA> "modified Bollinger band") or even 7,300. Meanwhile, there is support at 6,800 (last week's lows) and important support at 6,720 (the December lows).

S&P 500 equity-only put-call ratios turned downward over a week ago, which is bullish for stocks. The ratios remain on buy signals and will continue to do so as long as they are declining.

Market breadth has generally remained positive over the past couple of weeks, but now it is in danger of rolling back over to a sell signal. Countering that to some extent is cumulative volume breadth, which made all-time highs this week - strong confirmation of the new highs being made by SPX.

On the NYSE, new 52-week highs continue to completely dominate new 52-week lows. So this indicator also is in the bullish camp. This buy signal would be stopped out if new 52-week lows outnumber new 52-week highs on the NYSE for two consecutive days.

The above market internals are generally bullish, although the breadth oscillator might be slipping. Volatility indicators are bullish, too. The VIX VIX "spike peak" buy signal of Jan. 21 remains in place, as does the trend of VIX buy signal that originated in early December. VIX moved upward on the scare of tariffs last week, but quickly retreated when that concern faded.

The construct of volatility derivatives is also bullish for stocks. The term structures of the VIX futures and of the Cboe volatility indices slope upwards, and there is a large premium on the VIX futures. Those are bullish signs for the market.

With indicators nearly all bullish and SPX reaching for all-time highs, the picture overall is positive, but we will take all signals as they occur. It is a bit disappointing that SPX hasn't yet broken out to the upside. Continue to roll deeply in-the-money options.

Tech earnings to the rescue?

Looking ahead to next week, the earnings calendar remains active, and the table below shows the more popular and volatile stocks that are reporting.

We look at the price of the at-the-money straddle, just before earnings, expressed as a percent of the stock price. The "needed" column is how cheap the straddle needs to be in order to be a viable candidate for a straddle purchase. (The column entitled "PM?" shows whether the earnings announcement will be before the market open (N) or after the close $(Y)$ on the date shown.)

   Symbol  Date      PM?  Needed 
   AMZN    02/05/26  Y    6.83% 
   CMG     02/03/26  Y    6.32% 
   GOOG    02/04/26  Y    5.02% 
   PLTR    02/02/26  Y    12.04% 
   QCOM    02/04/26  Y    5.83% 

As an example, near the close of trading next Wednesday, Feb. 4, look at the price of the GOOG at-the-money straddles expiring on Feb. 6. If they cost less than 5.02% of the stock price, they are a buy, in theory, based on the postearnings movements of the last 10 GOOG earnings periods. Of course, this is only a guideline. The straddle prices reflect the accumulated knowledge and expectations of all traders leading up to the earnings. Selective straddle purchases can pay off when the underlying subsequently makes a large move post-earnings.

New recommendation: Satellogic (SATL)

Satellogic (SATL) has advanced strongly on heavy stock and option volume over the past two months. It has now broken out over its 2025 highs and is a strong momentum candidate for further gains.

Buy 6 SATL (Mar. 20) 5 calls at a price of 1.20 or less. Stop out if the shares close below $3.90.

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 1 TSEM (Feb. 20) 125 call and short 1 TSEM (Feb. 20) 140 call: Continue to hold without a stop for now. Roll up now, to the TSEM $(TSEM)$ (Feb. 20) 140-155 call bull spread.

Long 1 SPY (Feb. 20) 686 call and short 1 SPY (Feb. 20) 706 call: This position is the trend of VIX buy signal. It would be stopped out if VIX were to close above its 200-day moving average for two consecutive days.

Long 1 BMO (Jun. 18) 130 call and long 1 BMO (Jun. 18) 130 put: Continue to hold this straddle. Roll the calls up if BMO $(BMO)$ trades at $150 and roll the puts down if it trades at $110.

Long 2 SPY (Feb. 20) 683 puts: Held in line with the equity-only put-call ratio sell signals. Sell these puts now, since the put-call ratios have rolled over to buy signals.

Long 6 AAL (Feb. 20) 15 puts: We will continue to hold as long as the AAL $(AAL)$ put-call ratio is on this sell signal.

Long 1 SPYM (Feb. 20) 81 call and long 1 SPYM (Feb. 20) 81 put: Roll the calls up to the 84 strike if SPYM SPYM trades at $84 or higher. Roll the puts down to the 78 strike if SPYM trades at $78 or lower.

Long 300 shares of BWEN $(BWEN)$: The stop remains at $3.15.

Long 1 LH (Feb. 20) 260 call: Hold the call as long as the put-call ratio for LH $(LH)$ remains on a buy signal.

Long 3 ERAS $(ERAS)$ (Feb. 20) 7.5 calls: Raise the closing stop to $7.75.

Long 1 SPY (Feb. 27) 688 call and short 1 SPY (Feb. 27) 708 call: This is the position based on the "spike peak" buy signal of Jan. 21. We will hold this position for 22 trading days (about a month) but it would be stopped out if VIX were to close above 21 (its most recent high).

Long 2 METC $(METC)$ (Mar. 20) 24 calls: The trailing stop remains at $20.

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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January 29, 2026 17:16 ET (22:16 GMT)

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