The stock market has run into considerable resistance at the top of the trading range, as it appears to be consolidating for a violent move either an upside breakout to new all-time highs, or a failure at the top of the range, leading to a swift retracement to the bottom of the range (4060). Since May 24th, $SPX has not closed above 4208 nor below 4192. That is an extremely narrow range, considering the volatility that has been displayed since February 2020.
One big change in our indicators is that, as of the close on June 3rd, the weighted equity-only put-call ratio has rolled back over to a buy signal, according to our computer analysis programs. The standard ratio is still graded as a "sell" by those programs, but to the naked eye, it is obviously rolling over, too.
Breadth has generally been much better on this leg of the $SPX rally that began on May 19th. There has been positive breadth on all but two days since then. This action has pushed the breadth oscillators strongly onto buy signals.
Volatility indicators are bullish regarding stocks, too. The $VIX "spike peak" buy signal is still in effect. Moreover, the trend of $VIX is lower in that it is trading below both its 20-day and 200- day Moving Averages.
The bulls have just about everything they want -- buy signals from most of the indicators and $SPX on the verge of new all-time highs. However, those new all-time highs need to be confirmed by $SPX or the other indicators won't matter. With volatility dropping, we continue to feel that this is a good time for buying straddles on the broad market.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.