Weekly Market Commentary 12.27.13

The rally that began last week with the Fed announcing tapering has
broken out strongly to new highs.  The fact that this occurred during
a seasonally bullish period has certainly helped, too.  $SPX will
remain bullish as long as it holds above support at 1810.

Equity-only put-call ratios are shown Figure 2 & 3 (below).  Both are at new
lows now, and as such they are both on buy signals (because they are
declining) and they are overbought (because they are so low on their


Market breadth has been strong on the breakout.  Both breadth indicators
are on buy signals and are in overbought territory.
Volatility indices ($VIX and $VXO) have plunged to extremely
below 11.  These are at overbought levels now, but -- like the put-call
ratios and breadth -- they aren't sell signals.

In summary, there are numerous overbought conditions -- from
equity-only put-call ratios, breadth, and volatility.  Yet, the market can
continue to rise while these persist.  The outlook is bullish.