When $SPX broke out to new all-time highs in early June, it seemed labored, and that breakout quickly faded. But now, in late June and early July, $SPX has moved to new all-time highs with more authority -- having closed at a new all-time high for the sixth trading day in a row.
$SPX should have support at the most recent breakout level. That support would be just below 4260, although it has not been tested. There is also support at 4167 (tested twice in June) and 4060 (tested twice in May). All three support levels are marked with red horizontal lines on the chart in Figure 1. In reality, as long as $SPX remains above those levels, it will still have a bullish chart.
Equity-only put-call ratios remain on buy signals, as heavy call buying associated with the rally in the NASDAQ stocks continues to drive these ratios lower. Their rate of descent seems to be slowing, but as long as they are descending, they will remain on buy signals for the stock market.
Breadth is really the only problematic area right now. The breadth oscillators fell into sell signals on June 30th.
Volatility remains a positive force for the stock market, as it generally continues to fall -- and gives "spike peak" buy signals when it briefly rises. The latest "spike peak" buy signal of June 21st remains in place. In addition, the trend of $VIX remains downward.
In summary, almost everything is bullish, with a few minor exceptions. So we will continue to hold a number of long positions, but will have no trouble adding bearish positions when confirmed sell signals appear -- as this is one in breadth has.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.