Finally, $SPX has broken out over the heavy resistance at 2820. The breakout wasn't as resounding as expected, and we are in the process of retesting the breakout zone (2800 is the low end of the zone). A close back below that level would be very negative at this time.
The equity-only put-call charts are good examples of what we are seeing in several areas: technical indicators are struggling to stay positive after this long bullish run in the market. Both of these put-call ratios gave terrific buy signals in early January, and they declined steadily as the market rallied. But now they are wavering. In both cases, the computer analysis programs "say" that they are both still on buy signals, but you can see with the naked eye that they are struggling.
Market breadth has been flipping back and forth between buy and sell signals. As you may recall, breadth was spectacularly strong during January and February -- so strong that it was historic, and that normally has longer-term bullish implications for stocks. But more recently, breadth has become quite mixed and today's action will push these oscillators back to sell signals.
Volatility remains solidly in the bullish camp, though. $VIX is muddling along, and as long as it's below 17, stocks should be able to rise. There would be worry if $VIX were to trend higher -- as in a breakout above 17.
Finally, I want to point out that the Russell 2000 Index ($RUT; IWM) is sporting a large, negative divergence.
In summary, the $SPX chart is now bullish for the first time in quite a while. That is the leading indicator and it means that the short- term outlook is positive. So, we'll remain vigilant, while staying long. A violation of support at 2800 by $SPX would change this picture to bearish.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.