Weekly Commentary

For the second week in a row, a rising market was blindsided by
negative "macro" news out of Europe and suffered a violent downturn
as a result. What has been quite astonishing is the speed with which the last
two declines have occurred. When all is said and done, though,
support at SPX 1215-1220 is still in place.

The equity-only put-call ratios are clinging to their buy signals. Market breadth continues to swing wildly from day to day. Most recently, it is back on a buy signal.
Volatility indices (VIX and VXO) are trendless, but spikes in either direction are to be faded.
All of these indicators seem to be doing the same thing -- trading in a range. Moreover, they are following the market rather than leading it. Even when apparent intermediate-term signals occur, there is no follow-through. But as long as SPX support at 1215-1220 holds, the bulls have the upper hand.
Larry McMillan http://www.optionstrategist.com