By Lawrence G. McMillan
The market continues to act much better than it did in February through April. That positive intraday reversal on Thursday, May 3rd, still stands as the day that things changed. $SPX has been up most days since then, with only one large down day -- May 15th.
Having said that, the one indicator that is still not in synch on the bullish side is the $SPX chart itself. There is a problem in the 2750 area. Until $SPX closes above there, the chart will continue to have a bearish tint to it.
Meanwhile, on the downside, that strong rally on May 3rd emanated from another "touch" of the 200-day Moving Average. That rising MA is now at 2630. So any declines would find support there. Below that, though, trouble would develop.
Put-call ratios remain strongly on buy signals. This includes both equity-only put-call ratios and the Total ratio.
The breadth oscillators are on buy signals and are in modestly overbought territory.
Volatility remains very bullish. In fact, $VIX has been in a downtrend since roughly the first of April. That's bullish for stocks. Furthermore, it fell below 15 and it has remained there.
In summary, all of the indicators are positive at this time, except for the chart of $SPX itself. Things have been this way for a while now, and we've seen similar setups in the past. Ignoring the $SPX chart is usually a bad idea, and that's why we're still waiting for confirmation (a close above 2750 or below 2630) before taking on a more aggressive intermediate-term stance.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.
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