The low-volume rally of last Friday (July 6th), finishing up the holiday week, was a breakout over resistance at 2740. That has spurred a strong, quick move to the next resistance level at 2800. $SPX is now bumping up against the March intraday highs, and it has closed at its highest price since January.
These new relative closing highs make the $SPX chart bullish in that there is an upward channel with higher highs and higher lows. That channel is marked with blue lines on the chart in Figure 1. The top of the channel is at 2840 and rising, so if $SPX can clearly break out above 2800, that upper trend line should be the next stop.
Equity-only put-call ratios remain on sell signals, as they continue to climb.
The breadth oscillators have remained on buy signals since July 5th, despite some slippage in breadth this week (the number of advancing issues shrunk each day from Monday through Wednesday). It wouldn't take much in the way of negative breadth to reverse these oscillator signals to "sell" at this point, and since they have been a good early indicator most of the time this year, we will be watching them carefully.
The entire volatility complex remains in the bullish camp. This week, there was some consternation in the markets because of the threat of increased tariffs against China. But $VIX barely rallied. It has remained below 15 since July 5th, meaning that is in a bullish state for stocks.
In summary, the upside breakout over 2740 was bullish. $SPX needs to overcome resistance at 2800 in order to really put the bulls in control. As long as support at 2740 holds, that is a possibility. A close below 2740 would return the status to "trading range."
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.