It is hard to imagine a market any more perverse than this one. Once again, there has been a failure to break out on the upside, despite some favorable (although not unanimous) technical conditions. Now $SPX has pulled back into the previous trading range, whose limits of 1810-1900 are more secure than ever.
Tuesday saw very little follow-through to Monday’s strong day, and that was disappointing. Although $SPX and other major averages made marginal new all-time highs, it certainly didn’t look or feel like a good day. $SPX has technically broken out, and it has support all the way down to 1880, or even slightly below.
The stock market continues to frustrate all but the most short-term traders. Anyone looking for a trend to develop has not been able to find one in weeks. Wednesday's low at 1860 is support, as is the previous week's low at 1850. Below there, the April lows at 1810 are a major support level. Resistance, however, exists all throughout the 1880-1900 area.
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The stock market is stalled at the high end of its trading range (1810-1900). There is near-term support at last Monday's low of 1850.
Equity-only put-call ratios remain split. The weighted ratio continues to decline from a recent high, and that means it's on a buy signal, while the standard ratio remains on a sell signal.
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There is only going to be one issue published in May – on the 4th Thursday, May 22nd. We are planning for that to be a “double issue.” The reason for this change in the publication schedule is an extensive travel schedule from April 30th through May 15th, which will not allow time for publication of a formal issue. The weekly Hotline updates will continue throughout this time, without interruption.
Recently, it came to light that some traders follow the 90-day $VIX (Symbol: $VXV) because when the “regular” $VIX exceeds the 90-day $VIX, worthy market signals are generated. Recently (Volume 23, No. 4), we discussed what happens when the Short-Term Volatility Index ($VXST) crosses above $VIX. There are some similarities in these two cases.
The stock market is once again nearing all-time highs, although it has not broken out (yet). If $SPX can't punch on through to new highs, then it will remain within the widened trading range. At this point, most of the technical indicators are bullish, so we would expect at least an attempt to challenge the highs.
Equity-only put-call ratios have remained on sell signals for over a month now. That is beginning to change, as the ratios are starting to roll over.