Weekly Commentary

A week ago, stocks seemed to be on the brink of breaking down. But the
bulls regrouped, and $SPX rallied strongly off of that support base.
Hence, the 1425-1430 area is now stronger support than ever.

Equity-only put-call ratios are the most bearish indicator of the
lot. They continue to rise rapidly, after having given sell signals last
week. Since they are still rising, they are still on those sell signals.

Market breadth indicators are hovering right on the edge of sell signals.

Volatility indices ($VIX and $VXO) have remained subdued in
recent weeks, even when the stock market declined last week.

As long as $VIX is below 17, the stock market should be able to to move higher.

In summary, the fact that the market bounced off of support this
week was very bullish. But $SPX now needs to challenge and exceed
the resistance at 1475 in a relatively short time, in order to keep the
momentum going. Regardless, a breakout of the 1425-1475 range will
likely lead to a further move in the direction of the breakout.

Larry McMillan