Weekly Stock Market Commentary 9/27/13

By Lawrence G. McMillan

$SPX now has resistance at the mid-September highs of 1730. There is support at 1680, 1660, and then at the August lows of 1630. This week, $SPX generated a sell signal, based on a recent overbought condition.That is one of the few confirmed sell signals.

Equity-only put-call ratios are bullish. The breadth oscillators have failed to produce sell signals, despite a stock market that was declining.  If negative breadth develops in the next two days, these would turn negative, though.

Volatility indices ($VIX and $VXO) have remained subdued, which has been bullish for stocks.  If $VIX closes above 15, though, that would turn this indicator negative.

In summary, the fact that the bears couldn't complete simple sell signals in breadth and $VIX speaks volumes about their ineffectiveness.  But it doesn't mean they can't regroup, so we want to keep a contingent sell signal in place. 

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