Weekly Commentary

The stock market had just about everything going for it in technical
terms this week, but then the fundamentalists delivered a nasty blow
yesterday, Thursday, June 21st. Technically $SPX is just below the support
level of 1330-1340.


Equity-only put-call ratios remain on buy signals, despite
Thursday’s large decline.

Market breadth was very poor on Thursday. As a result, both
breadth oscillators registered sell signals.

Volatility indices ($VIX and $VXO) were the last indicators to
turn positive earlier this week. That occurred when $VIX fell below
21 on Monday and then proceeded to drop to 17 by mid-week. As we
have been saying for some time, $VIX above 21 is bearish for stocks,
while $VIX below 21 is bullish.


In summary, the technical indicators remain bullish, except for
breadth. We are going to give the upside the benefit of the doubt. But
if $SPX should decline further, or if $VIX should close above 21, or
if the put-call ratios should roll over, then we would have to relinquish
our currently bullish stance.

Larry McMillan