This week, $SPX overcame the previous resistance at 3155 and appeared ready to take off. But then it faltered again, at roughly the 3185 level. Hence it is still in a trading that extends from 2920 to 3230. A decisive breakout of that range in one direction or the other will likely signal the next large directional move.
In contrast, NASDAQ has been much stronger than $SPX. The NASDAQ Composite made a new all-time high on June 5th and a new all-time closing high the next day. Since then, it has closed at a new(er) all-time high nine times, including five of the last six trading days.
Equity-only put-call ratios remain on sell signals. At least that is the output of the computer programs that we use to analyze these charts. But in reality, they are just moving sideways -- slightly above the lows of the most extreme overbought conditions of mid- June. We would expect to see them racing higher in a truly bearish situation, and that will eventually happen. At this point, however, call buying remains extremely heavy on most days.
Breadth has been relatively weak in the last month, and both breadth oscillators are once again on sell signals after yesterday's (July 9th's) action.
Volatility remains relatively high. $VIX has bounced off its rising 200-day moving average three times in the last month, including twice in the last week. As long as it is above its 200-day MA, that is a potential bearish sign for stocks.
The short-term interpretation of the $VIX chart is more bullish in that the $VIX "spike peak" buy signal remains in effect.
In summary, the bulls are still in charge because the $SPX chart has not broken support. It's as simple as that. We would expect a strong $SPX move once it does eventually break out of this trading range.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.