$SPX is in a very volatile trading range, as $SPX has traversed the 4600 to 4700 area several times. Each time it declines, oversold conditions arise, spurring a rally. But then it fails at the top of the range. 4600 is the nearest support, with support at 4500 and 4300 below that.
Equity-only put-call ratios remain on sell signals. These ratios continue to rise at a quick pace, and they will remain on these sell signals until they roll over and begin to decline. The standard ratio (Figure 2) is already at its highs for the year, which makes it oversold, but is not a buy signal. The weighted ratio (Figure 3) has more room to rise before it can be considered "oversold."
Market breadth has remained poor and the breadth oscillators remain on sell signals, albeit in oversold territory.
But the one area that has not been nearly as negative is that of implied volatility: $VIX and its derivatives. There is still a $VIX "spike peak" buy signal in place. And the construct of volatility derivatives is positive for stocks now as well.
In summary, we are trading confirmed signals as they occur, and there are a lot of them these days. However, we have no "core" position while $SPX is in this trading range.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.