Stocks have been on an explosive move to the upside ever since seven
days ago, when a swift, but short-lived decline was abruptly halted in
an intraday reversal at 1645 on $SPX. Since then, $SPX has risen 88
points in very short order and doesn’t seem to be done rallying yet.
$SPX has now made a new all-time high — both intraday and
closing. If it holds this level for another day, it should clear the way
for further upside gains. Even if there is a pullback, there is support
at 1710 and again at 1690.
Equity-only put-call ratios are still on sell signals. This is due in
large part to distortions that were taking place: heavy put buying as
protective measures by traders who were hedging long stock positions.
Breadth indicators remain on buy signals, and both are now in overbought
$VIX generated a spike peak buy signal and has now retreated a great deal
and is already down to levels near 13 — levels from which past selling has
In summary, all of the indicators are in a bullish mode, except the
put-call ratios (which have been distorted by hedging activity). There
are already overbought conditions, but they can persist while the
market rallies. At this time, we remain bullish, with stops tightened up
to recent support areas.