The upward market reversal that began on Tuesday when $SPX bottomed near the 1840 area, continued with passion on Wednesday. The rally was aided by the benign Fed minutes, and now $SPX is 25 points above Tuesday’s lows. The rally was accompanied by some very strong technicals as well. It was almost as if the buyers were waiting for the sellers (of Friday and Monday and early Tuesday) to finish before they stepped in with a vengeance.
The broad stock market, as measured by the Standard & Poors 500 Index ($SPX) made new all-time intraday and closing highs on consecutive days this week. That, coupled with some new buy signals from breadth makes our intermediate-term outlook bullish.
Countering the bullish case is the fact that the equity-only put- call ratios have stubbornly remained on sell signals, but this might be protective hedging activity.
The Standard & Poors 500 Index ($SPX) has been bouncing around within a trading range for nearly a month now. There is resistance at 1880+ (the all-time highs) and there is support at 1840 (most recently tested a couple of weeks ago). There is validity to the theory that it is being wound up like a coiled spring, and could therefore explode with some force once the range's limits are broken.
Two weeks ago, as the market turned downward, a strong sell signal was generated by the “modified Bollinger Band” system. Last week, when there was a strong reflex rally, we received a $VIX “spike peak” buy signal. That system, too, is a powerful system usually. So which one is right? This article will explore the answer to that question.
The market action in the last 10 days has been a complete whipsaw. Now, the chart of the Standard & Poors 500 Index ($SPX) shows the index to be in a trading range -- bounded by resistance at 1880+ (the all-time highs) and support at 1840 (last Friday's lows).
Equity-only put-call ratios remain on sell signals, even though the market has bounced back this week.
There will be a very slight alteration of our publishing schedule. The second issue in March will be published one day early, on Wednesday, March 26th. This is because of the AAPTA Conference in Austin, to which I will be traveling on Thursday, March 27th (the usual publishing day).
This stock market has been able to ward off even a modest correction
since the fall of 2012. However, we are now seeing a chart breakdown
accompanied by sell signals from some of our most trusted indicators.
If the bears can't make some hay with this environment, I would be
surprised.
Equity-only put-call ratios have rolled over to sell signals.
And so it begins. Sell signals have been registered, and it is possible that more will follow. $SPX closed off nearly 10 points yesterday, as attempts to rally all afternoon eventually failed, and the index closed near its lows. S&P futures have traded another 5 points lower overnight. This activated the “modified Bollinger Band” sell signal.
This week's action makes the $SPX chart bullish (how could it be anything else when trading at new all-time highs?).
There is no technical resistance for a chart at new all-time highs. There is support at 1850 (which had been resistance), then at 1825- 1835 below that. It is our opinion that a close below 1825 would be quite negative.
Equity-only put-call charts continue to be bullish.
