By Lawrence G. McMillan
Stocks continue to advance at a rapid rate. Despite one half day of correction (down 40 points from high to low on Tuesday), $SPX has closed at new all-time highs on three of the last five days. There is now minor support at 2770 -- the low of the half-day correction that took place.
Equity-only put-call ratios continue to make new multi-year lows. The standard ratio hasn't been this low since the summer of 2014, and the weighted ratio hasn't been this low since the spring of 2010. For now, they are overbought but not yet on sell signals.
Market breadth continues to be one of the weaker indicators. At the current time, the NYSE breadth oscillator is on a sell signal, but the "stocks only" breadth oscillator is not. That is the only confirmed sell signal we have amongst our indicators.
Volatility has perked up a bit. $VIX is in a tiny uptrend (marked with a blue line on the chart in Figure 4). But even so, it has not even reached the 13 level yet. That's the horizontal red line in Figure 4, and is the level where we have rather arbitrarily set our demarcation line between bullish and bearish. As long as $VIX closes below 13, that's bullish for stocks.
In summary, the $SPX chart remains bullish and so does our intermediate-term outlook. Until or unless $SPX begins to break some support levels, this outlook will not change. Overbought conditions will only be able to produce a short-lived correction, at most.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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