By Lawrence G. McMillan
Once $SPX broke out over resistance at 2940, especially considering that it was a strong gap breakout, it has not looked back. There was a slight consolidation in the 2960-2980 range, and now the Index is apparently on its way to challenge the all-time highs at 3025. The chart will be bullish as long as $SPX continues to close above 2940.
Equity-only put-call ratios continue to drop and thus they remain on the buy signals that were generated in late August.
Market breadth was been quite strong. Breadth has been positive for the last seven consecutive trading days, and for 10 of the last 11. Thus, both oscillators are on buy signals and both are in overbought territory.
Volatility has dropped considerably in the past week. From an intermediate-term perspective, there was some concern that the trend of $VIX was beginning to rise, but that is not longer the case, since $VIX dropped below 17. As long as it stays below 17, that is bullish for stocks.
Our outlook remains bullish at this time. There are no sell signals in place, and the only overbought conditions seem to be in the breadth indicators. That would change if $SPX fell below 2940 and $VIX rose above 17, so those would be our "stops."
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
© 2023 The Option Strategist | McMillan Analysis Corporation