At face value, it appears that the bulls may be having trouble holding onto the gains from the upside breakout to new highs by $SPX. But a closer look shows the glaring discrepancy between the Dow ($DJX) and the NASDAQ-100 ($NDX; QQQ). The Dow was the first of the major indices to register a new all-time buy $NDX has lagged badly behind, having last made a new all-time high in mid-February. $SPX is caught somewhere in the middle, because it has all the Dow stocks in it and most of the $NDX stocks as well.
In any case, $SPX is back inside its old trading range of 3870 3950. That should provide support, but if $SPX closes below 3870, then the recent upside breakout would have to be declared a "false breakout" and a more bearish stance adopted.
Equity-only put-call ratios continue to rise, meaning that they are still on sell signals. While these may not have been the "best" sell signals in terms of the $SPX chart, they are quite accurate in terms of the NASDAQ chart.
Market breadth has deteriorated badly this week, and both breadth oscillators gave sell signals as of the close of trading on March 18th.
Volatility generally remains in the bullish camp. The $VIX "spike peak" buy signal is still in effect and will be as long as $VIX does not re-enter "spiking" mode. Moreover, the trend of $VIX is down, as both $VIX and its 20-day moving average are below the declining 200-day moving average.
In summary, the majority of the indicators are still bullish, but not all. We are maintaining a "core" bullish position but will take small counter-positions if sell signals arise. A close below 3870 by $SPX would be a bearish development and would require a more bearish stance.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.