Weekly Stock Market Commentary 4/18/14

By Lawrence G. McMillan

The stock market abruptly ended its decline of a week ago and rallied all week. Wednesday's strongly higher opening turned into an overall bullish day, and as a result a number of indicators rolled over to buy signals or generated new buy signals as well.

$SPX is now right back in the middle of the old 1840-1880 trading range.  In effect, we have now had a false upside breakout in early April and now have had a false downside breakout.  This is extremely distressing to both the bulls and the bears.

Equity-only put-call ratios remain on sell signals, and they will continue to do so for a while.

Market breadth has been influential.  The breadth indicators are now both back on buy signals once again.

Volatility indices ($VIX, $VXO, and $VXST) collapsed heavily, although they did close above their lows.  This produced a $VIX buy signal.

So, $SPX has turned from bearish to neutral, while market breadth and volatility have turned from bearish to bullish.  Only the equity-only put-call ratios remain bearish.  Overall, the evidence is slightly to the bullish side.

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