By Lawrence G. McMillan
On Monday of this week (April 1st), $SPX resoundingly broke out to the upside, clearing the 2860 resistance level. That breakout also improved both the put-call ratios and the breadth oscillators, which acts as further confirmation of the bullishness that is being exhibited right now.
Both equity-only put-call ratios turned bullish last Monday, when $SPX made the strong move above 2860. These signals were not only visible to the naked eye (see Figures 2 and 3), but were confirmed by the computer analysis programs that we use to interpret these charts.
Similarly, the strong breakout by $SPX on Monday was accompanied by strongly positive breadth, although it was not a "90% up day." Both breadth oscillators remain on buy signals, and they are in overbought territory. That's a good thing when $SPX is breaking out to new relative highs.
Volatility remains bullish. a low $VIX is benign as far as the stock market goes; stocks can continue to rise for a long time while $VIX is low. The danger occurs when $VIX begins to rise.
In summary, the $SPX chart is bullish now that it has broken out over 2860, and our other indicators are bullish as well. Hence, we are bullish for the short-term, and likely the intermediate-term as well.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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