By Lawrence G. McMillan
New all-time intraday and closing highs were registered yesterday for $SPX, the NASDAQ Composite, and the Dow- Jones Industrials. Thus the $SPX chart remains bullish as it is clearly in an uptrend, and the moving averages are all rising as well.
Equity-only put-call ratios have rolled over to sell signals. One might think that because these are 21-day moving averages, these would be the last indicators to react. It turns out in our studies of previous tops, that these are usually among the first indicators to turn negative.
Market breadth has been struggling somewhat of late. Both breadth oscillators slipped into sell signals a little over a week ago, but reversed back to a buy the next day. They remain on those buy signals now. However, they are only one strong down day (of negative breadth) from rolling back over to sell signals.
Volatility indices remain at low levels. That means they are overbought, but it is not a sell signal for the market if $VIX is at low levels. It would take a $VIX breakout to the upside in order to generate a sell signal.
In summary, the anecdotal evidence of a top keeps growing as media commentators and analysts trot out statistics about seemingly dire things such as the Fed, the Presidential Election, Donald Trump, the Global economy, and the large number of big names who are short -- Soros, Icahn, Gross, etc. But few of those things are measurable -- they are just arbitrary opinions. In reality, the $SPX chart is bullish, and so are most of our indicators. Hence we remain bullish.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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