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By Lawrence G. McMillan

A rather large dichotomy is emerging in this market: the chart of $SPX remains bearish, while most everything else is taking on a bullish slant. This has happened before, and usually the negativity of $SPX wins out. However, each market cycle is different to some extent, so we will continue to watch these rather interesting developments.

The chart of $SPX still shows lower highs and lower lows since the beginning of February. The current rally is carrying up towards resistance at 4080, which has proven to be formidable so far. In fact, that resistance area extends from 4080 up to 4200, so $SPX would need to break out over 4200 in order to upgrade the chart's status to bullish.

Equity-only put-call ratios rolled over to buy signals about two weeks ago, and they remain on those buy signals currently. That will continue to be the case as long as the ratios are declining.

Breadth has been positive every day since we last published. That has confirmed new buy signals from the breadth oscillators and has already pushed them into overbought territory. New buy signals from the breadth oscillators often get overbought right away, and it is not necessarily a problem.

The entire complex of indicators having to do with volatility is bullish for stocks. There is a $VIX "spike peak" buy signal, where we have begun tightening the stops since $VIX has fallen so much. Also a trend of $VIX buy signal is in effect (circle on the chart in Figure 4).

So, we have are at something of a crossroads. Bulls can take heart from the various buy signals from the internal indicators and plenty of new bulls are showing up every day. However, unless $SPX can rally through the overhead resistance, the bears will still have a case.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

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