MW The Fed has no problem with rate cuts - and neither does the stock market

By Lawrence G. McMillan

The S&P 500 Index (SPX) didn't fight the Fed after the U.S. central bank lowered interest rates by a quarter-point on Wednesday. You would have thought that was baked into the market, given its rise into the announcement. But buyers have stepped up.

There are several SPX SPX support levels, all marked with horizontal red lines on the accompanying chart: 6,500 (the August high); 6,340-6,360 (the August lows), and 6,200 (the July low). At this point, any move below 6,500 would be somewhat disappointing to investors, but it wouldn't necessarily be the start of a bear market.

Most of our indicators, but not all, have followed along with the bullishness of the SPX chart. One that has not is the McMillan volatility band (MVB) sell signal, marked with a green "S" on the SPX chart. It would be stopped out if SPX closes above the +4<SIGMA> band, which it may do as soon as today.

Equity-only put-call ratios continue to decline, and that is bullish for stocks. They will remain on their buy signals until they roll over and begin to trend higher. The computer programs that we use to analyze these charts are getting "itchy" - they want to call sell signals because the ratios are so low on their charts (a reversion to the mean would generate a sell signal, in other words). But we want to see visual confirmation of the ratios' rise before acting.

Market breadth continues to be something of a problem for stocks. Breadth has been flat to negative for the past four trading days, and our breadth oscillators are on sell signals. That might change if the market rips to the upside from here, but so far breadth has not expanded in the way that it normally does, with SPX trading at new all-time highs.

However, cumulative volume breadth (CVB) has continued to make new all-time highs. CVB is merely the cumulative running total of daily volume on advancing stocks minus daily volume on declining stocks. The fact that this is making new highs - both in "stocks only" terms as well as NYSE terms - is positive confirmation of SPX making new all-time highs.

CVB has continually been rising along with SPX, even though simple breadth statistics have lagged behind. To illustrate why this happens, consider this simple example. Recently Nvidia was up on the day, trading 125 million shares, and Nike was down, trading 10 million shares. So simple breadth is zero - one up and one down. But volume breadth was 115 million shares to the advancing side (125 minus 10). So, in a broad sense, institutions and traders have been buying a lot more of the advancing stocks, even though those are not a large number of the overall set of stocks.

New highs on the NYSE continue to easily outpace the number of new lows, so this indicator remains bullish for the broad market. This buy signal would be terminated if new lows on the NYSE were to outnumber new highs for two consecutive days.

Realized volatility is the only other remaining sell signal that we have in place, and - like the MVB sell signal mentioned above - it is on the verge of being stopped out. The 20-day historical volatility of SPX (HV20) has fallen to 9%. If it falls to 8%, this sell signal will be stopped out.

Implied volatility indicators have remained bullish for the stock market. VIX VIX edged a little higher as the FOMC meeting approached, but not a lot. Now it is back near 15, and so the trend of VIX buy signal (for stocks) remains in place. That will continue to be the case until VIX closes above its 200-day moving average (currently at 19) for two consecutive days. There is no "spike peak" buy signal in place at this time.

Finally, the construct of volatility derivatives remains bullish for stocks, too. The term structures of the VIX futures and of the Cboe volatility indices are sloping upwards, and the VIX futures are trading with a large premium to VIX. Those are all bullish signs for the broad market.

In summary, the SPX chart remains bullish and thus that is our main impetus. We will add positions in line with any new signals that appear. Also, continue to roll deeply in-the-money calls up to higher strikes.

New recommendation: Bitfarms (BITF)

This is a very speculative, low-priced bitcoin-related stock. Option and stock volume are exploding and their patterns are extremely bullish. We recently bought BITF (BITF) after seeing similar technical patterns in ATAI $(ATAI)$ and OPEN $(OPEN)$, and those have worked out - so we are going to use the same approach here.

Buy 6 BITF (Oct. 17) 3 calls at a price of 1.00 or less.

Note: there are options with the base symbol BITF1, which represent 2.52 times BITF. Do not buy these. Buy the "regular" BITF calls. Stop out if BITF closes below $2.25.

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.

If bought, we will continue to hold as long as the put-call ratio for FTNT is on a buy signal.

Earnings to note

FedEx $(FDX)$ (FDX) reports earnings after the close today. The at-the-money straddle was recently priced at 18 points, or a move of 7.9%. While that seems like a lot, FDX has normally moved even more after earnings are reported - 7.9% exceeds just four of the past 10 post-earnings moves in FDX. So whille it's close, buying this straddle doesn't seem to have a strong statistical chance of being profitable.

Micron Technology $(MU)$ (MU) is due to report earnings after the close on Tuesday, Sept. 23. Currently, the at-the-money straddle is priced at 11% of the stock price. That is relatively expensive, as only three of the past 10 post-earnings moves have been greater than that. However, with AI-related technology companies, there is always the chance of an Oracle-like explosion.

Jabil Inc. $(JBL)$ (JBL) is reporting earnings after the close on Thursday, Sept. 25. These straddles are expensive, with the projected move being 11.6%. As it turns out, though, JBL often does make sizeable moves after its earnings report, and so 11.6% is cheaper than four of the past 10 post-earnings moves. In fact, if the straddle cheapens just a bit next week, and could be bought for 11.3% of the stock price, then that would be cheaper than five out of 10 - and a potentially interesting straddle 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 expiring APH (Sept. 19) 120 calls: roll to the APH (Oct. 17) 120 calls. There is no longer a trailing stop here, since this APH $(APH)$ position has been rolled up several times.

Long 1 expiring TSEM (Sept. 19) 60 call: roll to the TSEM (Oct. 17) 67.5 calls. Continue to hold TSEM $(TSEM)$ without a stop.

Long 1 SPY (Sept. 26) 645 call and short 1 SPY (Sep. 26) 665 call: This position is the trend of VIX buy signal. We are going to roll now, because this spread expires next week: Sell the spread you own and buy the following: Buy 1 SPY (Oct. 10) 660 call and sell 1 SPY (Oct. 10) 675 call. Stop out if VIX closes above 19 for two consecutive days.

Long 5 expiring SVXY SVXY (Sept. 19) 47 calls: roll to the SVXY (Oct. 17) 51 calls. We monitor the weighted VIX futures premium via a proprietary calculation. Specifically, the calculation is currently at 2.06. This trade would be stopped out if it drops to 0.50 or lower. We will update the calculation weekly.

Long 1 expiring SPY (Sept. 19) 647 call and short 1 SPY (Sept. 19) 660 call: Roll to the SPY (Oct. 17) 660-675 call bull spread (i.e., buy the 660 call and sell the 675 call). We will hold until new lows outnumber new highs on two consecutive days on the NYSE.

Long 4 expiring ATAI (Sept. 19) 2.5 calls: Roll to the ATAI (Oct. 17) 4 calls. The stop remains at 4.20.

Long 5 OPEN (Oct. 17) 10 calls: These calls were rolled up on Sept. 11. Stop out if OPEN closes below $7.20 on any day.

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 SPY (Sept. 26) 636 put: We rolled into this put last week. 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 or 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 Oct. 76 calls up to the Oct. 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 10 points now. Meanwhile, we will hold a long position as long as the weighted put-call ratio for GLD GLD remains on a buy signal.

Long 1 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 (NVDA) remains on a sell signal.

Long 10 CORN Nov (21st) 17 calls: These were bought on Sept. 16, when CORN CORN closed above $17.75. We will hold these as long as the weighted put-call ratio for Corn (C00) futures is on a buy signal.

MW The Fed has no problem with rate cuts - and neither does the stock market

By Lawrence G. McMillan

The S&P 500 Index (SPX) didn't fight the Fed after the U.S. central bank lowered interest rates by a quarter-point on Wednesday. You would have thought that was baked into the market, given its rise into the announcement. But buyers have stepped up.

There are several SPX SPX support levels, all marked with horizontal red lines on the accompanying chart: 6,500 (the August high); 6,340-6,360 (the August lows), and 6,200 (the July low). At this point, any move below 6,500 would be somewhat disappointing to investors, but it wouldn't necessarily be the start of a bear market.

Most of our indicators, but not all, have followed along with the bullishness of the SPX chart. One that has not is the McMillan volatility band (MVB) sell signal, marked with a green "S" on the SPX chart. It would be stopped out if SPX closes above the +4<SIGMA> band, which it may do as soon as today.

Equity-only put-call ratios continue to decline, and that is bullish for stocks. They will remain on their buy signals until they roll over and begin to trend higher. The computer programs that we use to analyze these charts are getting "itchy" - they want to call sell signals because the ratios are so low on their charts (a reversion to the mean would generate a sell signal, in other words). But we want to see visual confirmation of the ratios' rise before acting.

Market breadth continues to be something of a problem for stocks. Breadth has been flat to negative for the past four trading days, and our breadth oscillators are on sell signals. That might change if the market rips to the upside from here, but so far breadth has not expanded in the way that it normally does, with SPX trading at new all-time highs.

However, cumulative volume breadth (CVB) has continued to make new all-time highs. CVB is merely the cumulative running total of daily volume on advancing stocks minus daily volume on declining stocks. The fact that this is making new highs - both in "stocks only" terms as well as NYSE terms - is positive confirmation of SPX making new all-time highs.

CVB has continually been rising along with SPX, even though simple breadth statistics have lagged behind. To illustrate why this happens, consider this simple example. Recently Nvidia was up on the day, trading 125 million shares, and Nike was down, trading 10 million shares. So simple breadth is zero - one up and one down. But volume breadth was 115 million shares to the advancing side (125 minus 10). So, in a broad sense, institutions and traders have been buying a lot more of the advancing stocks, even though those are not a large number of the overall set of stocks.

New highs on the NYSE continue to easily outpace the number of new lows, so this indicator remains bullish for the broad market. This buy signal would be terminated if new lows on the NYSE were to outnumber new highs for two consecutive days.

Realized volatility is the only other remaining sell signal that we have in place, and - like the MVB sell signal mentioned above - it is on the verge of being stopped out. The 20-day historical volatility of SPX (HV20) has fallen to 9%. If it falls to 8%, this sell signal will be stopped out.

Implied volatility indicators have remained bullish for the stock market. VIX VIX edged a little higher as the FOMC meeting approached, but not a lot. Now it is back near 15, and so the trend of VIX buy signal (for stocks) remains in place. That will continue to be the case until VIX closes above its 200-day moving average (currently at 19) for two consecutive days. There is no "spike peak" buy signal in place at this time.

Finally, the construct of volatility derivatives remains bullish for stocks, too. The term structures of the VIX futures and of the Cboe volatility indices are sloping upwards, and the VIX futures are trading with a large premium to VIX. Those are all bullish signs for the broad market.

In summary, the SPX chart remains bullish and thus that is our main impetus. We will add positions in line with any new signals that appear. Also, continue to roll deeply in-the-money calls up to higher strikes.

New recommendation: Bitfarms (BITF)

This is a very speculative, low-priced bitcoin-related stock. Option and stock volume are exploding and their patterns are extremely bullish. We recently bought BITF (BITF) after seeing similar technical patterns in ATAI (ATAI) and OPEN (OPEN), and those have worked out - so we are going to use the same approach here.

Buy 6 BITF (Oct. 17) 3 calls at a price of 1.00 or less.

Note: there are options with the base symbol BITF1, which represent 2.52 times BITF. Do not buy these. Buy the "regular" BITF calls. Stop out if BITF closes below $2.25.

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.

If bought, we will continue to hold as long as the put-call ratio for FTNT is on a buy signal.

Earnings to note

FedEx (FDX) (FDX) reports earnings after the close today. The at-the-money straddle was recently priced at 18 points, or a move of 7.9%. While that seems like a lot, FDX has normally moved even more after earnings are reported - 7.9% exceeds just four of the past 10 post-earnings moves in FDX. So whille it's close, buying this straddle doesn't seem to have a strong statistical chance of being profitable.

Micron Technology (MU) (MU) is due to report earnings after the close on Tuesday, Sept. 23. Currently, the at-the-money straddle is priced at 11% of the stock price. That is relatively expensive, as only three of the past 10 post-earnings moves have been greater than that. However, with AI-related technology companies, there is always the chance of an Oracle-like explosion.

Jabil Inc. (JBL) (JBL) is reporting earnings after the close on Thursday, Sept. 25. These straddles are expensive, with the projected move being 11.6%. As it turns out, though, JBL often does make sizeable moves after its earnings report, and so 11.6% is cheaper than four of the past 10 post-earnings moves. In fact, if the straddle cheapens just a bit next week, and could be bought for 11.3% of the stock price, then that would be cheaper than five out of 10 - and a potentially interesting straddle 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 expiring APH (Sept. 19) 120 calls: roll to the APH (Oct. 17) 120 calls. There is no longer a trailing stop here, since this APH (APH) position has been rolled up several times.

Long 1 expiring TSEM (Sept. 19) 60 call: roll to the TSEM (Oct. 17) 67.5 calls. Continue to hold TSEM (TSEM) without a stop.

Long 1 SPY (Sept. 26) 645 call and short 1 SPY (Sep. 26) 665 call: This position is the trend of VIX buy signal. We are going to roll now, because this spread expires next week: Sell the spread you own and buy the following: Buy 1 SPY (Oct. 10) 660 call and sell 1 SPY (Oct. 10) 675 call. Stop out if VIX closes above 19 for two consecutive days.

Long 5 expiring SVXY SVXY (Sept. 19) 47 calls: roll to the SVXY (Oct. 17) 51 calls. We monitor the weighted VIX futures premium via a proprietary calculation. Specifically, the calculation is currently at 2.06. This trade would be stopped out if it drops to 0.50 or lower. We will update the calculation weekly.

Long 1 expiring SPY (Sept. 19) 647 call and short 1 SPY (Sept. 19) 660 call: Roll to the SPY (Oct. 17) 660-675 call bull spread (i.e., buy the 660 call and sell the 675 call). We will hold until new lows outnumber new highs on two consecutive days on the NYSE.

Long 4 expiring ATAI (Sept. 19) 2.5 calls: Roll to the ATAI (Oct. 17) 4 calls. The stop remains at 4.20.

Long 5 OPEN (Oct. 17) 10 calls: These calls were rolled up on Sept. 11. Stop out if OPEN closes below $7.20 on any day.

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 SPY (Sept. 26) 636 put: We rolled into this put last week. 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 or 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 Oct. 76 calls up to the Oct. 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 10 points now. Meanwhile, we will hold a long position as long as the weighted put-call ratio for GLD GLD remains on a buy signal.

Long 1 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 (NVDA) remains on a sell signal.

Long 10 CORN Nov (21st) 17 calls: These were bought on Sept. 16, when CORN CORN closed above $17.75. We will hold these as long as the weighted put-call ratio for Corn (C00) futures is on a buy signal.

(MORE TO FOLLOW) Dow Jones Newswires

September 18, 2025 15:47 ET (19:47 GMT)

MW The Fed has no problem with rate cuts - and -2-

Long 2 NKE Nov (21st) 72.5 puts: These were bought on September 16, when NKE $(NKE)$E closed below 73. We will hold these as long as the weighted put-call ratio for NKE futures is 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

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 18, 2025 15:47 ET (19:47 GMT)

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