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Weekly Stock Market Commentary 12/20/2019

By Lawrence G. McMillan

The market could hardly be stronger than it is. $SPX, NASDAQ, and the Dow are making new intraday and closing highs almost daily.

There is now support at 3150, which had been a minor resistance area in late November and early December, before the Index blasted up through there on December 12th -- and hasn't stopped since. Below that, there are support areas at 3130 (minor), 3065-3070 (strong) and 3025-3030.

Equity-only put-call ratios are in very overbought territory, but they haven't been able to generate strong sell signals (yet).

Market breadth has improved, and both breadth oscillators are on buy signals and are in modestly overbought territory.

Volatility remains in the bullish camp. First, the $VIX "spike peak" buy signal from December 4th remains in place. Second, the trend of $VIX is sideways-to-down, and that is bullish as well.

In summary, we remain bullish in line with the indicators. However, the massive number of overbought conditions is once again worrisome, so we would not ignore sell signals, should they appear. Meanwhile, tighten trailing stops where appropriate and roll (deeply) in-the-money calls up to be at-the-money calls.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

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