The market is getting more volatile and bearish as the combined pressures weigh upon it. These include the Congressional wranglings, the negative seasonality of early October, and the technical deterioration of our indicators.
The Standard & Poors 500 Index ($SPX) has support at 1660-1670 and at 1630 below that. There is resistance at 1730.
$SPX now has resistance at the mid-September highs of 1730. There is support at 1680, 1660, and then at the August lows of 1630. This week, $SPX generated a sell signal, based on a recent overbought condition.That is one of the few confirmed sell signals.
$SPX exploded to the upside after the Fed's announcement that they were not going to taper, with both new buying and short covering entering into the fray. With $SPX now at new all-time highs, it has positive momentum, but is also extremely overbought. This latter condition will eventually lead to some sell signals, but perhaps not right away.
$SPX made a strong upside push this week and that closed the downside gap from nearly a month ago. That officially terminated the "bearish" status of the $SPX chart. It's hard to say that the chart has turned bullish, though, since there is still overhead resistance at 1700- 1710. Underneath, there is support at 1660 and then stronger support at 1630-1640.
Stocks gapped higher on the open yesterday and just kept going higher all day. $SPX has now closed above its declining 20-day moving average for the first since the market topped out just over a month ago. Oversold rallies – which this still may proved to be (although it seemed stronger than that on Monday) – usually die out at about this level: just beyond the declining 20-day moving average. Chart-wise, $SPX is now at the 1670 resistance area.
At this point, the $SPX chart is still bearish, because it has a sequence of lower highs and lower hows.
The equity-only put-call ratios continue to remain on sell signals. The weighted ratio continues to move higher almost every day, thus confirming its bearishness.
Market breadth is the lone positive area right now. Both breadth indicators improved enough this week to generate buy signals.
The stock market has continued lower, after first breaking significant support at 1680 about two weeks ago. With the further breakdown this week, below the next support level at 1640, there is a distinct pattern of lower highs and lower lows. That makes the $SPX chart bearish.
Equity-only put-call ratios are both on sell signals.
The Standard & Poors 500 Index ($SPX)) broke down below the important support level of 1670-1680 today and, in doing so, unleashed a torrent of sell signals. The picture has changed to intermediate-term negative.
The equity-only put-call ratios are split. The weighted ratio made new lows recently, trading at its lowest prices in over a year. Then it curled up, in a sell signal. The standard ratio remains on a buy.
The overbought conditions that had existed a couple of weeks ago were largely worked off by a sideways to slightly down stock market, as measured by the Standard & Poors 500 Index ($SPX). It seems that the bears had their chance, but didn't seize it once again. There is strong support in the 1670-1680 area.
Equity-only put-call ratios remain on buy signals. Note the charts if Figures 2 and 3.
The stock market has proved to be very resilient once again. Overbought conditions -- which looked formidable a couple of weeks ago -- have mostly abated with only a slight downward (and mostly sideways) move by the Standard & Poors Index ($SPX). Now, new highs have been registered, and the bears can only lament once again that they failed to capitalize.
$SPX has support in the 1670-1675 area, which is the area of daily lows several times in July.
