A violent rebound occurred yesterday, signaling that either a) Friday’s move was an aberration, or b) volatility has returned with a vengeance. Today, S&P futures are down 17 points in overnight trading, for no specific reason. There has just been a continual erosion all night long. That would argue for b) above. We are now getting mixed signals from some reliable indicators. These will sort themselves out, but for now there is some conflict.
$SPX had remained in a trading range for nearly two months, but now it has broken support at 2160 and that is significant.
The only negative indicators that we had as of yesterday were the equity-only put-call ratios, but the others will join in today. As you can see from Figures 2 and 3, the put-call ratios have been edging higher since making their lows in mid-August. That puts them on sell signals.
With the holiday weekend approaching, and attendance low because of it, the bears took a couple of shots this week at breaking $SPX down below support at 2160. They came close, but they couldn't do it. Thus, the $SPX chart remains positive, with support at 2160.
Equity-only put-call ratios have been edging higher all week, and they remain on sell signals because of it. But they aren't really rising much, so the sell signals aren't strong.
This week, $SPX did break down a little bit, violating the 2175 level, which had been the bottom of the tight 2175-2195 trading range that had contained prices for most of this month. But the piercing of minor support at 2175 was not significant. However, a breach of the 2160 support area would be more damaging, in my opinion.
Stocks continue to trade in a tight, sideways range. This is a situation which will eventually lead to a breakout. Most analysts are bearish because of the low volatility and because of the fact that $SPX is near or at all-time highs. But the important part of that sentence is "Most analysts are bearish." Forget the reasons. If they are mostly bearish, the market is unlikely to accommodate them.
New all-time intraday and closing highs were registered yesterday for $SPX, the NASDAQ Composite, and the Dow- Jones Industrials. Thus the $SPX chart remains bullish as it is clearly in an uptrend, and the moving averages are all rising as well.
The market tried to break down this week, as $SPX finally pushed through the lower end of the very tight 2160-2175 trading range that had held it in check since mid-July. However, that feint downward was short-lived, and $SPX crawled right back up into the trading range once again. As a result, the $SPX chart remains bullish.
The major support area is 2120-2135, the top of the trading range that had held $SPX back from making new highs for over a year.
The broad stock market, as measured by $SPX, is locked in a very tight range -- and has been since new all-time highs were reached on July 14th. Overall, though, $SPX remains in a strong uptrend, with support at 2160.
Equity-only put-call ratios remain on buy signals, as they continue to move lower on their charts. They are now reaching the lows of 2015.
All indicators were in synch this week, as $SPX finally broke out to new all-time highs. The breakout started with a "90% up day" last Friday, which put the Index on the brink of new all- time highs, and it carried through with $SPX higher each day so far this week. We have targets extending as high as 2205 at this time.
Equity-only put-call ratios finally got with the bullish program, and both have not only rolled over to buy signals, but both have made new relative lows for this year.
