Weekly Stock Market Commentary 10.11.13

The volatile moves this week have given rise to a number of new trading signals. Since some are in conflict with others, one has to make a choice as to how to approach them.

$SPX sold off sharply and recovered sharply and is now more or less where it was just over a week ago. An $SPX close above 1695 would likely pave the way for another attempt at the all-time highs of 1730, which is also resistance.

Equity-only put-call ratios moved to sell signals recently, and have been accelerating upwards ever since. This upward move solidifies their intermediate-term sell signals.

Both of the breadth oscillators we follow moved back to buy signals, as a result of Thursday’s monster rally.

$VIX completed a buy signal yesterday as well. This has the potential to be a very powerful buy signal.

In summary, the violent rally of Thursday was extraordinary. An $SPX close above 1695 would give technical confirmation of these buy signals from $SPX itself. Lacking that, the bears may take another run at things next week.

S&P 500 (SPX), CBOE Market Volatility Index (VIX), 21-Day Equity Only Put Call Ratio (PC21), and Weighted 21-Day Equity Only Put Call Ratio (PC21 w) charts updated each Friday.

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