McMillan Weekly Market Commentary 5.24.13

The stock market finally took a hit this week, but it hasn’t really changed the overall picture — yet.
First, as far as the chart of $SPX is concerned, it is still bullish. Yesterday’s low at 1635 has to be considered a support level as well as 1625-1630, and then the more important support at 1600.  if THAT were violated, it would be bearish.

LM 5 24 SPX

Equity-only put-call ratios have plunged in the past week, driving down to the lowest levels in more than a year.  However, that is not a sell signal. Market breadth took a pounding on Wednesday and much less so on Thursday.  As a result, one of our breadth indicators has turned
bearish but the other has not. Volatility indices ($VIX and $VXO) have behaved in a rather
strange manner this week: they have risen every day I’m going to say that $VIX is still bullish for stocks as long as it doesn’t close above its Thursday high at 15.11.

LM 5 24 vix
In summary, despite the nervousness that Wednesday’s action created, the picture remains rather bullish — at least until actual sell signals materialize, which has not yet occurred.