Weekly Stock Market Commentary 7.26.13

$SPX remains in a strong uptrend.  However, it has reached overbought levels, in that it is “too far” above its 200-day moving average.  The first support level is 1670, and if that is violated, traders should turn cautious.

The equity-only put-call ratios remain on buy signals, despite
“wiggles” at the end of some charts.

Market breadth indicators are still on buy signals, but are at a
point where another day of strong negative breadth would likely push
them over to sell signals.

Volatility indices ($VIX and $VXO) remain bullish.

The trend of $VIX remains downward (bullish for stocks), and that will be the
case as long as $VIX closes below 15.

In summary, the indicators remain bullish, but overbought conditions
augur for a correction, likely to be short-lived, but could be more
serious if more sell signals develop in the intermediate-term indicators.