The stock market this week had one of the most volatile weeks in
history. First, the bears were in control, driving SPX to a new low
beneath the 1100 lows of August. Since then, it’s been nothing but up.
This rally has not yet turned the picture bullish, but it’s getting close.
A close above the 50-day moving average at 1180 would be bullish.
The equity-only put-call ratios rolled over to sell signals last
week, and they remain bearish.
Breadth (advances minus declines) has been swinging wildly
back and forth. Currently the breadth indicators are positive.
Volatility indices ($VIX and $VXO) generated spike peak buy
signals this week. A $VIX close below 35 would be even more bullish.
In summary, we continue to look for an October low and a strong
rally thereafter. It did not seem to me that Tuesday’s low was that
low, but if this rally persists, I would have to change my opinion.