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By Lawrence G. McMillan

It may seem as if the market is slowing down, but if it is, it's only in a relative sense. $SPX made new all-time intraday and closing highs on each of the last two days, and $NDX (QQQ) did the same. The Dow ($DJX; DIA) and Russell 2000 (IWM) are only one day removed from all-time closing highs.

All one really needs to know is that the chart of $SPX (and the others) remains strongly positive. The first support level is at 3725-3750. Below there, the next support area is 3630-3650.

Let's begin with the equity-only put-call ratios. They continue to be extremely overbought (that is, very low on their charts and not far from 20-year lows). They have edged higher in the last three weeks or so; that is not a sell signal. These ratios are telling us that they are in an extremely overbought state, but they are not actionable right now.

Market breadth has continued to be positive, for the most part, although not nearly as positive as it was last fall. Both breadth oscillators are on buy signals, but only in modestly overbought territory.

Perhaps the strongest bullish indicator of all is the "new highs vs. new lows" indicator. It continues to be wildly bullish as new highs are plentiful and new lows are almost non-existent.

The implied volatility space remains generally bullish. The $VIX "spike peak" buy signal of January 5th remains in effect; it would be stopped out if $VIX were to return to "spiking mode," which so far it has not. From a more intermediate-term perspective, $VIX and its 20-day moving average remain below the now- declining 200-day MA.

In summary, $SPX remains positive, so bullish positions should continue to be held -- rolling up and/or raising trailing stops. There is a lot of negative "noise," so when sell signals are confirmed, we are adding them in small size to our trading portfolio.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

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