Divergent Market Signals 4/15

SPX touched support and its rising 20-day moving average at 1310, and probed slightly below that level today before rallying.

Perhaps more interesting is the fact that the equity-only put-call ratios have remained on buy signals throughout the pullback over the last week.

There was similar action in the volatility indices ($VIX and $VXO). The calm in these volatility indices is another bullish indication, despite the falling broad market.

Only breadth is giving a negative signal at this time.

In summary, the bears have growled a bit this week, but the market has pulled back to its rising moving average in an orderly fashion — alleviating its overbought breadth condition — while the other intermediate-term indicators remain positive. This is a positive combination from our point of view.