By Lawrence G. McMillan
$SPX exceeded its early July highs today. That is a new high for this recovery rally that began in early June. As a result, the classic bullish pattern of higher highs and higher lows on $SPX has expanded and been strengthened by adding this new high (see Figure 1).
Equity-only put-call ratios remain strongly on buy signals. They continue to decline, and that is bullish for stocks.
Market breadth has been reasonably strong of late. Breath indicators are on buy signals, and they are modestly overbought.
Volatility indices ($VIX and VXO) remain bullish as well, in that they are in downtrends even when the last 6-day correction occurred.
In summary, we remain bullish in line with our indicators. If the market gets overbought enough for another short-lived decline (much like the recent 6-day decline) we would view it as a buying opportunity, as long as the lower rising channel line on $SPX remains intact.
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