The stock market, as measured by the Standard and Poors 500 Index
($SPX) has been meandering sideways for the past couple of weeks.
This had the effect of alleviating the overbought conditions that had
existed two weeks ago. Finally, today, the ennui ended, as
$SPX blasted to the upside. It made new post-2008 highs, and it looks
certain now to test 1440-1450.
Equity-only put-call ratios have remained on buy signals
throughout the last three months. However, they are now reaching
extremely low levels on their charts.
Market breadth was modestly weak over the past couple of
weeks, and there were breadth sell signals as a result. After
today’s strong rally, those breadth sell signals have been
canceled, and instead breadth is in modestly overbought territory once
Today $VIX dropped back below 17, which is "bullish territory"
to my way of thinking.
In summary, the outlook remains bullish as long as $SPX is
above the support area of 1395-1400. After today’s upside breakout,
it would be negative to see that support violated.