Buy signals remain in place as long as support holds

By Lawrence G. McMillan

So for the second time in four days, a severe down day was followed by a tepid rally.  This is hardly bullish inspiration. $SPX sits almost exactly in the middle of the month's lows (1270, roughly) and highs (1360).  There should also be support in the 1305-1310 area.  The media's pre-occupation with the European summit (seriously, how could 27 countries possibly agree on anything?) and the Supreme Court decision on the health care act (which will certainly affect a number of HMO's – see the High Implied Volatility list at the end of this report – but really shouldn't have a major effect on the broad stock market) will certainly contribute to volatility.

The equity-only put-call ratios remain on buy signals.  In fact, the weighted ratio dropped almost to its recent lows, so that is confirmation of the buy signal.  The standard ratio remains a little less convincing, but is still on a buy signal...

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