Free Weekly Stock Market Commentary 5/10/2024

By Lawrence G. McMillan

The stock market rally that began with an intraday turnaround on April 19th has blossomed into a full-fledged bull trend. The only further confirmation that is needed in order to assert the bullishness of the $SPX chart is a new all-time high on the Index -- a move above 5260. If somehow the Index should fail to make new highs, then the 5260 area would remain as resistance. There are support levels beneath the market now. That includes a couple of gaps that were registered in the last week. If those gaps were filled and $SPX closed below them, then the bears might be able to make a case. In short, if $SPX closes below 5070, that would be bearish.

Equity-only put-call ratios had continued to rise while the $SPX rally was taking place. But in the last week, the ratios have curled over and potentially have peaked. The standard ratio is only slightly rolling over, but the computer programs that we use to analyze these charts "say" that the standard ratio is now on a buy signal (there are some relatively large numbers coming off the 21-day Moving Average, so unless they are replaced by equally large numbers, the ratio will decline). The weighted ratio, though, is not getting the "buy" signal from the computer analyses just yet. To the naked eye, it looks like it has rolled over, but that official bullish designation is not yet forthcoming.

Breadth has been extremely strong recently. Thus, both breadth oscillators are on buy signals and are in overbought territory. It is a good thing when the breadth oscillators are overbought while $SPX is starting a new leg upward.

$VIX is in a bullish state as well. The "spike peak" buy signal of April 22nd remains in place. It will exist for 22 trading days, unless stopped out by $VIX returning to "spiking" mode. There had been a trend of $VIX sell signal in place as well, but it was stopped out on May 3rd.

We are still holding an out-of-the-money "core" bearish position until the weighted equity-only put-call ratio rolls over officially or until $SPX makes a new all-time high. Meanwhile, we are trading other confirmed signals around that.