By Lawrence G. McMillan
Everything is grinding to a halt in this market, and that is probably a sign that an explosive move lies in the not-too-distant future. $SPX has support at the old highs (2120). If that should fail, there should be a good support level at 2070.
Equity-only put-call ratios remain on sell signals, according to the computer programs we use to analyze these charts. However, if one looks at Figures 2 and 3, it is obvious that these ratios have just been trending sideways for the past few days.
Market breadth has been something of a problem since last summer. At the current time, these breadth oscillators are barely clinging to buy signals.
Volatility remains the most bullish technical area. $VIX dropped to its lowest levels since December. As long as $VIX is low and is not trending higher, stocks can continue to rise.
In summary, the move to new highs by $SPX has not been confirmed by most of our other indicators, nor by most other broad- based indices. Still, that doesn't seem to deter the market. As long as $SPX holds above the support at 2120, there is no reason to get bearish.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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