The three-day weekend was apparently long enough for the bulls to reload and come into the market strongly again yesterday. All of the major averages closed at new highs, and in most cases, 5-1/2 year highs. $SPX was among that group. $VIX and $VXO both traded at their lowest levels since April, 2007. The breadth oscillators expanded strongly, since breadth was very positive. They remain on buy signals, albeit in overbought territory.
The only potentially negative thing was that the put-call ratios ticked up a bit. But that was from protective put buying and not from speculation, I’m sure, so one can’t really treat it as bearish.
The strategy remains the same: stay long, for even though the market is overbought, there are no actual sell signals at this time.
This market comment was taken from this morning's edition of The Daily Strategist Newsletter.