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By Lawrence G. McMillan

Last Friday, $SPX traded down to nearly 4330 and has bounced from there. That is the support level that we have been talking about for some time, and it did a good job of holding. So, the big picture is that the $SPX chart is still bullish at this time, as long as that support at 4330 has not been violated. There is further support at 4200, but in my opinion, if the 4330 support level gives way, the bears will be running downhill at that point.

Given the large quantity of oversold conditions that exist or recently existed, the rally off of the 4330 level could be considered merely an oversold rally. Those typically reach the declining 20- day Moving Average (or maybe overshoot it by a small amount) and then fail again. That may be what's happening with the large decline in the market coming right after the positive earnings for NVIDIA (NVDA).

Equity-only put-call ratios remain solidly on sell signals, as they continue to climb. There has been quite a bit of put buying, even on days when the market has rallied. These ratios will remain on sell signals until they roll over and begin to decline.

Breadth has tried to improve from its heavily negative readings of the past few weeks. But even with a couple of days of positive breadth -- one of which was very positive -- the breadth oscillators remain on sell signals. From current levels, it's still going to take at least two more days of positive breadth to generate buy signals here.

While the above "internal" indicators have been quite negative, the same cannot be said for the volatility indicators. Those indicators remain bullish in varying degrees. $VIX tried to rally a little, but really is still mired at a relatively low level.

So, we continue to maintain a low-delta "core" bullish position in line with the fact that $SPX has remained above 4330. We are trading other confirmed signals around that, and will continue to do so.

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

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