The stock market continues to put on a tremendous display of bullishness. There was some brief but heavy selling in relation to the military action in Iraq, but most of the selling came in the overnight sessions and was largely reversed by the time the NYSE opened the next day.
With most of the major averages making new all-time highs, their charts remain bullish. There is support at 3190-3210. There is further support at 3150 and 3070.
Equity-only put-call ratios are in an extremely overbought state. They are making new relative lows daily, and have been doing so even on days when the broad market sold off a bit. The broad picture here is that these equity-only put-call ratios remain on buy signals and will do so until they roll over and begin to trend higher.
Market breadth was been rather dull. This is such an "old" story that it's not even worth discussing, but the market in the past three years has not been all that concerned with breadth. Technically, both breadth oscillators are on buy signals, but just barely.
Implied volatility (as measured by $VIX and the other CBOE Volatility Indices) remains low. $VIX has not closed above 16 since this rally began early last October. As long as that remains the case, stocks can rally, but a close above 16 by $VIX would be a sell signal.
In summary, the indicators are all bullish once again. We thus remain bullish, along with our indicators. However, the extreme nature of the overbought signals is some cause for concern, but we would not take bearish positions without confirmed sell signals.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.