The rally that began with an upside gap move on October 14th has turned out to be very strong, and $SPX has now traded at and closed at a new all-time high. The Dow is very close to following suit, but NASDAQ and the Russell 2000 lag behind. More about that later.
There is still a chance that $SPX is merely at the top of a trading range that extends roughly from 4300 to current levels, at 4550. A clear breakout above 4560 or so would dispel that notion.
The equity-only put-call ratios have reversed course over the past week and have generated buy signals. In figures 2 and 3, one can clearly see that they have peaked and are now trending lower.
Market breadth has held up pretty well, and both breadth oscillators remain on buy signals. They are in overbought territory and getting more overbought. That is exactly what should happen in a bullish environment when $SPX is making new all-time highs. Perhaps one fly in the ointment: NYSE breadth was negative, and "stocks only" breadth was barely positive on October 21st, when $SPX finally made a new all-time high.
The $VIX "spike peak" buy signal of October 1st has been a good one, and positions should be rolled up to higher strikes. That signal will be in effect for 22 trading days, or most of the month of October.
In summary, $SPX needs to make a decisive new high in order to be considered in a strong uptrend, and not merely at the top of its trading range.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.