By Lawrence G. McMillan

Prices edged lower this week, as the bulls are still reeling from the failed upside breakout that took place in February. After the breakout (whether you consider it to be over resistance at 4100 or whether you consider it to be the blue triangle in Figure 1), prices have pulled back below the apex of that triangle and volatility seems to be slowing down at least on a closing basis.

There is some support in the 3930 3940 area, which are the lows of this week. A stronger support level exists at 3900, and then there is major support in the area of 3760 3860 (the late December trading range). On the upside, there is minor resistance at 4020, with massive resistance above there at 4080-4200. A close above 4200 would be quite bullish, but even then, there would resistance at 4300 to deal with.

The equity-only put-call ratio sell signals are our most negative signals at the current time especially the weighted ratio, whose signal arose from a deeply overbought condition near the bottom of its chart (Figure 3). Both of the ratios will remain on sell signals as long as they are rising.

Breadth has become a muddled indicator. NYSE breadth has been much stronger than "stocks only" breadth, but positive breadth today would place both breadth oscillators on buy signals.

There is a new $VIX "spike peak" buy signal. In addition, the trend of $VIX buy signal remains in place, as long as $VIX continues to close below its 200-day Moving Average -- which is at 24.70 and falling.

Both bulls and bears are trying to convince everyone that the market is headed their way. The bulls are claiming that "everyone is bearish," but we know from looking at the weighted equity-only put-call ratio that that is not true. The bears, however, have not been able to follow through on the downside, as they did in 2022. So, we are maintaining our "core" bearish position (because of the negativity of the false upside breakout on the $SPX chart and the sell signals from the equity-only put-call ratios), but will trade other confirmed signals around that "core" position.

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