By Lawrence G. McMillan
The broad market is putting on a rather spectacular bullish performance. $SPX has repeatedly gapped to new all-time highs on at least four separate days since October 28th.
There is general support in the area of the old highs, at 3025- 3030. The next lower support at 2950 is crucial to maintaining the bull market. A close below there would be a game-changer, but it doesn't seem to be a problem at this time.
Equity-only put-call ratios remain on buy signals. There has been heavy call buying over the last three weeks, and that has pushed these ratios down to the lower levels of their respective charts.
Market breadth has not been nearly as strong as the put-call ratios. Yes, the breadth oscillators remain on buy signals, but they have sort of been holding onto those by their fingernails.
Volatility remains bullish, but in an overbought state similar to the put-call ratios. The successful $VIX "spike peak" buy signal of October 4th has "expired." Meanwhile, $VIX has moved to very low levels, which is okay as long as it stays there. A close above its 200-day Moving Average would be negative.
Overall, our indicators remain on buy signals --especially the chart of $SPX itself, which is trending higher with strong support underneath. Thus our outlook continues to be bullish. This market cannot be shorted until sell signals are confirmed.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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