The oversold rally that was underway last week ran out of steam as soon as it ran into the declining 20-day moving average of $SPX. There is now resistance at 2650. The 2175-2190 level still qualifies as support, and it has not been tested at all.
The equity-only put-call ratios remain on buy signals, despite the fact that they have curled up ovhe past few days. These buy signals would be canceled if the ratios rise to new highs.
Market breadth continues to swing wildly back and forth For the record, both breadth oscillators are still on sell signals after a terrible day on Wednesday, which was a very decisive "90% down day."
Meanwhile, $VIX has declined enough to close below its 20- day moving average for the last four days, and to close at its lowest price since March 11th. That sounds bullish, until one realizes that $VIX is still near 50. So, with $VIX at 50, it's hard to justify that as being bullish for stocks.
It's not only breadth and volatility that are displaying characteristics that haven't been seen since 2011 or 2008. This does mark the end of the "buy the dips" and "TINA" era that had dominated market thinking, really since 2009 and certainly since 2011. This is a true bear market, plain and simple. Hence, a "core" bearish position is warranted -- certainly as long as $SPX remains below 2730. Hence, while buy signals can be traded, we are continuing to be cautious.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.