If there is a theme to this market, it’s this: it’s overbought, but
continuing to rise. There is strong support for $SPX at 1810.
Moreover, there is now resistance near 1850.
Now for the litany of bullish, but overbought indicators: Equity-
only put-call ratios are typical of this group. Both ratios are declining,
and that is bullish. In addition, both ratios are at the lowest levels on
their chart and that means they’re overbought.
Market breadth indicators are in a somewhat similar state. Both
indicators are on buy signals, and both indicators are in (moderately)
Volatility indices ($VIX and $VXO) continue the pattern of
indicators that are overbought but bullish.
In summary, the market is overbought but bullish. That means
it can continue to rise, with the proviso that sharp, but short-lived
corrections (such as last Monday’s) are possible at any time.