$SPX managed to climb above the 2880 level this week and moved above 2900. Our initial estimate of resistance in the 2850- 2900 area was thus overcome, and the declining 50-day Moving Average was overcome as well. Now the next resistance level seems to be at 3000, which is where the declining 200-day Moving Average is.
Equity-only put-call ratios remain solidly on buy signals, and the computer analysis programs do not expect a change anytime soon. Both have fallen into the lower third of their charts, which means that the standard ratio is approaching levels where sell signals occurred in 2019.
Breadth exploded over the past week. This is surprisingly bullish development, and both breadth oscillators are on buy signals.
Volatility is still a big question mark for the bulls, though. Yes, the short-term trend is still down, which is short-term bullish for stocks. But the intermediate-term trend of $VIX is still bearish, and that is ultimately a very important problem for the bulls.
In summary, the bulls are feeling pretty good about this rally. However, until there is major improvement in the $SPX chart and improvements in the trend of $VIX as well as the term structure, the bears still have a major say in what is happening. So, we continue to maintain a "core" bearish position, while trading short-term buy signals around it.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.