Stocks are still in a negative mode, despite the presence of some very strong rally days emanating from oversold conditions.
The 2940-2950 area represents resistance for several reasons. Meanwhile, there is support at 2825, where $SPX has bottomed on three separate days recently. Below there, the support at 2720-2730 is more identifiable, for that's where $SPX bottomed out in both March and May.
Equity-only put-call ratios continue to rise, thus remaining on sell signals.
Market breadth has deteriorated rather badly in the last week, and the "stocks only" oscillator is deeply in oversold territory.
Volatility has been interesting to say the least. $VIX spiked up in early August and gave a "spike peak" buy signal on August 6th. But a more negative development is taking place, though, in the intermediate-term trend of $VIX. If the 20-day MA crosses above the 200-day MA, and $VIX is above the 200-day, that's a strong intermediate- term sell signal.
The intermediate-term trend remains negative, and thus we continue to recommend holding a "core" bearish position. But oversold conditions persist, so one can trade a small position against his "core" position.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.