Weekly Stock Market Commentary 8/9/13

By Lawrence G. McMillan

The overbought conditions that had existed a couple of weeks ago were largely worked off by a sideways to slightly down stock market, as measured by the Standard & Poors 500 Index ($SPX).  It seems that the bears had their chance, but didn't seize it once again.  There is strong support in the 1670-1680 area.

Equity-only put-call ratios remain on buy signals.  Note the charts if Figures 2 and 3.

Market breadth has generally been quite weak over the past few weeks.  As a result, the breadth indicators have returned to more normal levels from their overbought extremes of a month or so ago.

Volatility indices ($VIX and $VXO) have remained relatively subdued as well.  That is bullish for stocks.

In summary, unless there is a breakdown by $SPX and some accompanying sell signals, the market can work higher over the near term.

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