There have been a number of positive developments in the past week or so: buy signals, oversold conditions producing rallies, and so forth. But the primary concern is how the $SPX chart looks, and it continues to look bearish. It is still in a downtrend, with heavy resistance at 2820. If that resistance were overcome, then our stance would change to a more positive one.
There are a number of lows on the $SPX chart (Figure 1) between 2530 (the February lows) and 2630 (last week's lows). That general area should provide support.
The standard (Figure 2) and the weighted (Figure 3) put-call ratios are on buy signals. The rally this week generated some relatively heavy call buying, so the weighted especially is dropping rapidly.
Market breadth has improved, and both breadth oscillators have been on buy signals since November 26th. They continue to remain on those buy signals and are not yet in overbought territory.
Volatility has remained surprisingly high this week, but that is event-related. First, there was the Powell speech. Volatility was elevated in advance of that in case he said something bearish; he didn't. But $VIX has remained high (and the short-term index, $VIX9D, has remained even higher) as the G-20 meeting this weekend draws nigh.
In any case, a strict interpretation of the $VIX chart (Figure 4) shows that it is still in an uptrend (drawn on the chart) and that is intermediate-term bearish for stocks.
In summary, there are a number of newly bullish indicators The more over-riding concern, though, is that the $SPX chart remains negative. Morever, there is still the nagging reality that QQQ and IWM have much more negative charts than $SPX.
We will continue to view this as a bear market unless $SPX can close above 2820.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.