By Lawrence G. McMillan
The rally that began two weeks ago, with an upside gap move on October 11th, continues but almost in slow motion.
We should have some resolution fairly soon as to whether this market is ready for a breakout to new highs or a return to the old trading range.
Equity-only put-call ratios remain on the buy signals that were generated a little over a week ago. Neither buy signal arose from a particularly high point on the put-call ratio chart, so they weren't the strongest of signals.
Market breadth has been bouncing around daily. Since October 11th, "stocks only" breadth has oscillated between positive and negative breadth every day for the last 10 trading days. Breadth has been somewhat stronger on the positivedays, so both breadth oscillators are on buy signals and are in modestly overbought territory.
Volatility continues to remain rather tame, and that is generally bullish for stocks. The $VIX "spike peak" buy signal of October 4th remains in effect, and as long as $VIX continues to close below 17, that is bullish also.
In summary, all of our indicators are bullish, but $SPX has not confirmed with an upside breakout. As a result, we are trading from the long side, but are mindful of the fact that a failure by $SPX to make new all-time highs soon will begin to weigh negatively on the psyche of this market.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
© 2023 The Option Strategist | McMillan Analysis Corporation