Free Weekly Stock Market Commentary 8/21/26

By Lawrence G. McMillan

A week ago, it seemed that $SPX had a renewed upside momentum, as it was making new all- time highs and internal indicators were improving. But there has been no follow-through this week, and it seems that bullish momentum has been lost. The "culprit" seems to be an increase in T-Bond rates, although that hasn't mattered much before.

Even so, the $SPX chart remains positive as long as $SPX remains above support at 7600-7620 (the previous all-time highs). The pullback this week nearly reached that level and was a minor test of that support.

There is now resistance at 7744 (where a gap was closed on the $SPX chart) as well as resistance at the current all-time highs just above 7800.

As we review the next categories of indicators -- what we call the market internals -- you will see that each one has vacillated and is not that stable.

First are the equity-only put-call ratios. They rolled over to buy signals a week ago, and those buy signals are still in effect. However, the standard ratio has not retreated far from its local maximum of last week, and if it moves back a new high, that will stop out its buy signal.

Breadth is a category that has struggled. Breadth has been quite negative this week. That negativity has been reflected in both NYSE and "stocks only" terms. The NYSE-based breadth oscillator has been on a sell signal for some time. In addition, this week's action has produced a sell signal from the "stocks only" breadth oscillator as well.

However, the indicators surrounding $VIX are much more bullish for stocks. $VIX continues to close below its 200-day Moving Average. Hence the trend of $VIX buy signal for the stock market remains in place.

In summary, the $SPX chart remains positive, but the only support it's getting currently is from $VIX and its related indicators. A close below 7600 would be very negative. Otherwise, the internal indicators are presenting a mixed picture. We will continue to trade confirmed signals and will continue to roll deeply in-the-money options.