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By Lawrence G. McMillan

Most major stock indices made new 2023 highs this past week ($RUT; IWM is still a little shy of that). Thus, the charts remain positive, and a "core" bullish position is warranted. There are several gaps on the $SPX chart, and a pullback to support at 4440 would fill all the recent ones. There is further support at 4385, and then major support at 4330 and 4200. A violation of the support at 4330 would be a very negative development and would require a change of our "core" position, but a pullback of that depth doesn't seem likely right now.

On the upside, the next resistance area is at 4650, the March 2022 highs, which occurred early in the 2022 bear market. Beyond that, the all-time highs at 4800 could be in play.

Equity-only put-call ratios are near the lows of their charts, so they are still on buy signals, albeit in very overbought territory. When they begin to rise, they will generate sell signals.

Market breadth has been generally strong, and the breadth oscillators are on buy signals and are also overbought. It would take at least two days of negative breadth to generate oscillator sell signals from their current levels.

$VIX is hovering in the 13-14 area. It is no longer falling as the stock market rises, because there is still a fear factor out there (which is causing some larger traders to buy $SPX puts, thus keeping $VIX from falling farther). As long as $VIX remains subdued, it is not a problem for the stock market. The trend of $VIX buy signal remains in place.

We continue to maintain a "core" bullish position. We are raising trailing stops where appropriate and are rolling calls up to higher strikes when they become deeply in-the-money. So far, there are no confirmed sell signals, but we will trade those around our "core" position when and if they occur.

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

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