The $SPX chart itself is fine. It is rising, with all trend lines moving higher, including the "modified Bollinger Bands." There should be support near 2850, and perhaps even near 2870. Our target all along has been the all-time highs at 2940 and it still is. Unless this market regains some momentum, though, it is going to meet stiff resistance there.
The equity-only put-call ratios are typical of many of our other indicators: bullish, but overbought. The ratios have continued to decline at a very slow pace of late, and remain on buy signals.
Market breadth has been deteriorating. Thursday, April 18th, saw the markets higher all day, yet breadth struggled. At the close, NYSE breadth was slightly negative and "stocks only" breadth was positive by only a very tiny amount. Regardless, both breadth oscillators remain on buy signals.
Volatility is not worried, however. $VIX remains in a long-term downtrend (since Christmas Eve), and as long as volatility remains flat to down, stocks can rally.
In summary, none of our indicators are on sell signals. The $SPX chart looks fine. However, there are many overbought conditions, and market action has been sluggish. For that reason, we expect a short- term market correction to build up buying power and erase some of those overbought conditions.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.