By Lawrence G. McMillan
All indicators were in synch this week, as $SPX finally broke out to new all-time highs. The breakout started with a "90% up day" last Friday, which put the Index on the brink of new all- time highs, and it carried through with $SPX higher each day so far this week. We have targets extending as high as 2205 at this time.
Equity-only put-call ratios finally got with the bullish program, and both have not only rolled over to buy signals, but both have made new relative lows for this year.
Market breadth has been quite strong. As a result, both breadth oscillators are on buy signals.
Volatility indices have been benign and thus supportive of the bullish case. So, as long as $VIX is at these low levels, it's another overbought condition of sorts, but stocks can continue to rise while $VIX is trending lower or sideways. It's only when $VIX begins to trend higher that there is a problem.
In summary, all of the indicators are bullish, and thus we remain positive on the market. There are overbought conditions in place, and they are worth noting, but we would not take any bearish positions until there are actual sell signals. Overbought does not mean sell.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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