By Lawrence G. McMillan
The $SPX chart remains bearish. There is support at 2825. There is probably stronger support at 2720-2730, the area of the March and May lows. As for resistance, the major resistance area remains 2940-2950, which is not only the recent tops, but is also the psychological resistance caused by the fact that the July 2019 activity look like a false upside breakout to new all-time highs.
The equity-only put-call ratios remain on sell signals (Figures 2 and 3).
Market breadth has improved quite a bit over the past week, and both breadth oscillators rolled over to buy signals on August 16th. However, it has been a struggle to maintain these bullish levels, and the NYSE-based breadth oscillator has slipped back to a sell signal again.
As far as $VIX goes, we're back in the same position we've been in for a couple of months: a strong $VIX breakout above 17 would be bearish for stocks (perhaps even more so now, if it were to happen with the 20-day MA above the 200-day MA).
In summary, the big picture still seems negative, although the short-term oversold buy signals did have their say. The $SPX chart will remain negative unless it can close above 2950, and that is the most important indicator.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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