The broad stock market has gone into a very tight range over the last four trading days. After what had appeared to be a promising upside breakout on a gap a week ago Wednesday, there was no follow-through on the upside. Meanwhile, there has been no follow-through on the downside either. The $SPX chart remains bullish from a trending viewpoint.
Equity-only put-call ratios continue to plow along at very low levels, meaning they are in overbought territory. But they are rather noncommital until they begin to rise out of this area and trend solidly higher.
Market breadth hasn't been bad, but it hasn't been good, either -- and that's something of a problem. Both breadth oscillators are on sell signals at this time, but they are muddling along at levels where one strong day of positive breadth would easily cancel out those sell signals.
Volatility has been the most bullish indicator of all the ones that we follow. It has not had the problems of any of the above indicators. It has remained low and as long as that is the case, stocks can rise. $VIX only becomes a problem if it begins to trend higher.
For now, the intermediate-term outlook remains bullish because $SPX is above support and $VIX is below resistance.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.