fbpx Market Commentary 4/29/2011 | Option Strategist

Market Commentary 4/29/2011

By Lawrence G. McMillan

The market broke out to new 2011 highs this week.  Some of these indices are actually making new all-time highs, having exceeded their 2007 peaks.  The chart of $SPX now has a new bull market trend line, connecting the August and March lows.  The breakout over the old highs in the 1340 area could measure targets to nearly 1400 on this move.

Equity-only put-call ratios have remained on buy signals for some time now.

Breadth has been strong of late, and both breadth indicators are in overbought territory.

Most recently, $VIX has dipped below 15, which is quite low -- the lowest it's been since June 2007.  Four years ago, $VIX was on the way up, and a bear market was about to emerge.  Now, it's on its way down, and that's bullish.  Still, $VIX below 15 has to be considered a bit overbought.

In summary, it is very positive that the market has broken out and followed through.  The technical indicators remain largely positive, and that should be supportive of a further intermediate- term move.  The only problem at this time is the fact that overbought conditions are beginning to appear, which could lead to sharp, but short-lived corrections.

Sign up for The Option Strategist Weekly Updater to receive this market commentary delivered to your inbox each Friday for free.

Share this

Option Strategist
Blog Search

Recent Blog Posts

Trading or investing whether on margin or otherwise carries a high level of risk, and may not be suitable for all persons. Leverage can work against you as well as for you. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your initial investment or even more than your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and investing, and seek advice from an independent financial advisor if you have any doubts. Past performance is not necessarily indicative of future results.
Visit the Disclosure & Policies page for full website disclosures.