By Lawrence G. McMillan
The S&P 500 Index ($SPX) broke out to new all-time highs again this past week, and now has closed at a new all-time high or traded at a new intraday all-time high on six of the last seven trading days. That keeps the $SPX chart bullish. There should be some support near the 3340 area, which was the old highs that were exceeded this week.
As an aside, if one took Fridays out of this market, it would be on the moon. The last three Fridays have seen $SPX lose a total of 106 points. Over the past three weeks, on non-Fridays, $SPX is up a total of 154 points.
Equity-only put-call ratios are another indicator that remains in a bearish state. They were soooo overbought in mid-January, when they were making multi-year lows. Now, they have risen from there and are slowly trending higher. That upward trend means they are on a sell signal, and despite the slow upward pace the computer programs that we use to analyze these charts continue to indicate that they are on sell signals.
Market breadth has improved greatly since the calendar turned to February. Thus, the breadth oscillators are on buy signals.
The trend of $VIX has returned to a bullish state, albeit somewhat grudgingly. $VIX has now closed below 15 and below its 200-day Moving Average for the last three days.
In summary, the most bullish indicator is the chart of $SPX. When that is the case, one is best served by sticking with the upward momentum and remaining bullish.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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