Weekly Stock Market Commentary 2/15/13

By Lawrence G. McMillan

$SPX had been contained within a range of 1495 to 1515 for about two weeks. This week, though, the index has broken out to new highs, above that 1515 level. That is positive.

Technically, that 1495 to 1515 level should provide good support for any pullbacks. In fact, a close below 1495 would be negative, and would probably signal the onset of a more severe correction. Below there, support exists at 1460-1470, the area of the 2012 highs.

Meanwhile, the equity-only put-call ratios over the past few days, have started to move lower again, reasserting buy signals.

Market breadth has been steadily strong. Thus, our breadth indicators have remained on buy signals all along, although they too are in overbought territory.

Volatility indices ($VIX and $VXO) traded up briefly when there was a tiny market correction last week. However, they are now back to nearly their yearly lows -- the same levels last seen in July, 2007. As long as $VIX is this low, it might be considered overbought, but it is not a prohibition to higher stock prices.

This market continues to plod higher without much fanfare. It doesn't pay to anticipate a correction; there are already plenty who have been carried out on their shields trying to do that. Rather, we will wait for some confirmed sell signals before altering our still-bullish view.

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