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$SPX 2/9/2024
By Lawrence G. McMillan

The major indices are making new all-time highs with regularity. This includes $SPX, of course (as well as $NDX and the Dow), so we are still maintaining our "core" bullish position. There are some nagging worries -- such as the failure of small-caps ($RUT; IWM) to keep pace -- but until those worries become actual sell signals, they won't deter us from our bullish outlook.

There is $SPX support at 4850, with further support below that at 4800. Technically, there is strong support at 4600 as well, but if the market falls that far, the whole perspective of things will have changed.

Equity-only put-call ratios have turned downward again, returning to buy signals albeit at very low levels on the charts (especially the weighted ratio, Figure 3). This is not the ideal place for a buy signal to occur, but as long as these ratios are declining, that is an all-clear for stocks to rise.

Market breadth has been poor, even with $SPX and the other indices making new highs. This negative breadth is reflective of the fact that the "broad" market is not enjoying the bullishness that $SPX is. The breadth oscillators are on sell signals, and they have remained there even as $SPX has risen to 5000.

$VIX remains at low levels another overbought condition of sorts. But unless $VIX actually begins to rise, this is not a problem for the stock market. The trend of $VIX buy signal remains in place, and will continue to do so until $VIX closes above its 200-day Moving Average (currently at about 15.15).

So, we continue to hold a "core" bullish position, and we will trade other confirmed signals around that core. We are rolling deeply in-the-money calls upward as the market advance progresses. Even the somewhat negative seasonality of the month of February has not deterred this market (yet). But if and when it does, we will adjust our attitude accordingly.

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

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