Free Weekly Stock Market Commentary 11/29/2024

By Lawrence G. McMillan

The stock market has made new all-time highs this week, both on an intraday and a closing basis. $SPX has done so, and other major indices that have followed include the Dow Jones 30 Industrials ($DJX) and the Russell 2000 ($RUT). The NASDAQ-100 ($NDX) has not quite gotten there this week, after registering new all-time highs earlier in November.

As always, with the market at new all-time highs, there is no formal overhead resistance. But we continue to view the +4å "modified Bollinger Band" as a target of sorts. That is currently at 6130 and rising. There is support at 5870, which has been in place for some time now. We view that as an important level, and if $SPX were to close below there, we would abandon our "core" bullish viewpoint on the stock market.

Even so, below that there is further support, both in terms of the bullish island reversal that is still in place (circled on the $SPX chart in Figure 1), as well as the multiple support at 5670. There had been a negative island reversal on the chart, but that gap was filled and eliminated from concern by the rally over the last week.

Equity-only put-call ratios have descended to their yearly lows. That represents an overbought stock market, but it is not a sell signal. For these ratios to generate strong sell signals, they would have to begin to rise sharply and exceed their November highs.

Breadth improved, and the breadth oscillators remain on buy signals. There have been a few unusual days lately, where $SPX is moving in one direction, but breadth is flowing in the other direction. That's not too important in the larger picture, so we continue to view breadth in a positive light.

$VIX has drifted down to near its yearly lows. This is another overbought condition, but it is not a problem for stocks unless $VIX begins to rise sharply. The "spike peak" buy signal of November 6 remains in place.

Overall, this remains a bullish market, and we are maintaining a "core" bullish position as long as $SPX continues to close above 5870. We will add new positions based on newly-confirmed signals, and we continue to roll deeply in-the-money calls up to lock in partial profits and reduce downside risk.