The most important technical indicator -- the chart of the S&P 500 Index ($SPX) -- remains steadfastly bullish. It has continued to rise, establishing a myriad of support levels while doing so. Since August 28th, there has only been one day that this Index has even closed below its rising 20-day moving average. That is a strong uptrend.
The post-Thanksgiving seasonal period got off to a rousing start perhaps too rousing. The $SPX chart remains positive as long as it holds above support. The first support level is at 2600, which is the recent highs and also near today's (Friday's) lows.
The stock market has signaled that whatever was holding it back for the past couple of weeks ("correction" would be too strong of a word) is over. $SPX and all the other major indices have broken out to new closing and intraday all-time highs. This includes the previously-lagging Russell 2000 Index ($RUT, IWM).
$SPX remains in a bullish trend, despite breaking one support level this week -- a level which it quickly recovered. There is support at 2557 (Wednesday's low, from which prices have rallied over 30 points in a day). Below that, there is support at 2545 (the October lows), and then the major support at 2510 -- the September highs, and the area which launched the current leg of this long market rally.
Stock prices continue to rise, in general. There does seem to be a slowing of the upward momentum, but considering how overbought the market had gotten, much more was expected of the bears.
The $SPX chart remains bullish, in that it is rising, and all of its trend lines are rising as well. The index has still not closed below its rising 20-day moving average since early September -- a period of nearly two months.
The $SPX chart in Figure 1 is still a bullish chart. The moving averages are all trending higher. There is support at 2544 (this week's intraday reversal low), with more important support at 2510 and 2480. A close below 2510 would be somewhat bearish, and a close below 2480 would change the chart to an outright bearish one, in my opinion. But at current levels, there is room for a modest correction without completely rolling over into a bear market.
The S&P 500 Index ($SPX) has now made a new all-time closing or intraday high on 15 of the last 17 trading days. When the bears fail to capitalize on a selling opportunity such as Thursday, the bulls come back with a vengeance. The $SPX chart remains positive, with support at 2510.
Equity-only put-call ratios have turned bullish once again. Both of these ratios have begun to decline again, and when put-call ratios are declining, that is bullish for stocks.
The major indices pushed to new all-time highs again this week, although at a snail's pace. The $SPX chart is in a strong uptrend, and that is simply bullish. In the traditional sense, there is support at 2510, 2480, and 2400.
The equity-only put-call ratios have both rolled over to sell signals. These sell signals are confirmed by the computer programs that we use to analyze these charts, as well as by the naked eye (well, sort of).
Finally, there has been some follow-through movement to the upside. $SPX has made new all-time closing and intraday highs on the last two days. This keeps the $SPX chart bullish, of course. There is still the strong support at 2480 (the level from which the last major breakout occurred), and now there is also support at 2488 -- last week's lows.
