Weekly Commentary

This market is becoming the ultimate in defying bearish opinion.

Since June 1st, $SPX has advanced almost exactly 150 points and is
nearly back to the yearly highs — and therefore at a post-2008 high.
Yet, bearish opinion is still rather rampant.

$SPX remains within the rising trading channel that extends back
to early June (see Figure 1). It is near the top of the channel, so in that
sense, it is "overbought."


Equity-only put-call ratios continue to remain on buy signals.

Market breadth indicators remain on buy signals as well, and they are
into overbought territory.

Volatility indices ($VIX and $VXO) are trading at extremely low
levels. While the lower trend in $VIX is bullish for stocks, the fact
that $VIX is below 15 means it is overbought as well.


In summary, the market is still bullish for the intermediate-term.
The overbought conditions that exist now will likely lead to a sharp,
but short-lived pullback soon. That pullback will likely be a buying

Larry McMillan