Weekly Stock Market Commentary 1.10.14

Stocks have been fairly dull so far in 2014, but some movement is probably setting up soon. Not much has changed with respect to the indicators that we follow, but let’s review them anyway.

The Standard & Poors 500 index ($SPX) has pulled back modestly. As long as the support at 1810 remains intact, the trend is bullish for $SPX.

Equity-only put-call ratios continue to remain near the lower regions of their charts (Figures 2 and 3). This means they are in an overbought state.

Market breadth has been slightly negative so far this year as well. Both of the breadth indicators still (barely) remain on buy signals.

Volatility indices ($VIX and $VXO) are very low, and that is an overbought condition also. But as long as $VIX remains below 14.50, stocks should still be able to rally.

In summary, there are some overbought conditions (although no confirmed sell signals), but unless $SPX breaks down below support at 1810, and $VIX climbs above 14.50, this will remain a bull market.