The $SPX chart is unabashedly bullish. It continues to make new highs, remaining above the trailing moving averages and holding above support. Thus the intermediate-term outlook is still bullish, per the $SPX chart (our most important indicator).
Equity-only put-call ratios remain bullish (Figures 2 and 3). The standard ratio has developed a little "wiggle" over the past few days, but at this point the computer analysis programs are still grading this chart as being on a buy signal.
Bulls have been totally dominant again, over the past week (and really since last November). The gap upside breakout over the minor downtrend line (blue line in Figure 1), on July 12th, was once again the beginning of a strong upward move. This was similar to the previous upside breakout gap over a downtrend line, in late April. The $SPX chart is thus strongly bullish and will remain that way until support at 2400 is broken.
First and foremost, the most bullish of our indicators is the $SPX chart itself (although some of our other indicators seem to be grudgingly improving as well). The 2400 area has been rock-solid support and until that is broken the $SPX chart will remain bullish.
Equity-only put-call ratios are technically on sell signals, according to the computer analysis programs. However, the weighted ratio (Figure 3) has curled over, so its sell signal is weakening.
This stock market has been able to avoid a meaningful correction for quite some time. But now $SPX has closed below support at 2420, and the failed upside breakout of mid-June is looking like a big negative item on its chart, as well. Of course, several times in the recent past, it seemed as if $SPX were about to succumb and it didn't. Can $SPX pull this escape act off once again? If it can hold support at 2400, it will.
A real battle has developed around the 2420-2440 area of $SPX. That has been the trading range for the entire month of June, but recently there have been some violent moves within the range, including some failed attempts to break out of it. As a result, this is setting up a more important breakout, once $SPX can find its way to clearly break out of the range.
This past Monday, $SPX broke out to new all-time highs, smashing through the resistance area at 2440 in a strong manner. Then, just as abruptly, stocks have fallen since then, declining back into the previous 2415 2440 trading range. Both moves would ordinarily portend bigger moves, but in fact both were duds.
It seems that no matter how strongly the market seems to sell off early in the day, it recovers almost all of those losses by the end of the day. As a result, the $SPX chart remains bullish. Subscribers know that we place a great deal of importance on the $SPX chart's trend, and as long as $SPX holds above support, the outlook for the overall market remains intermediate-term bullish.
The market has roared to new all-time highs. This brute force market strength belies sell signals and a certain amount of general negativity in many of the other indicators. But it doesn't really seem to matter, as $SPX remains the strongest and, by definition, the most important indicator.
For the record, there is support at 2400 (this week's lows) and roughly 2350 (the lows of the big down day two weeks ago). An upside target of 2480 is in play, from the width of the previous trading range.
We have repeatedly stated over the years that the S&P 500 index ($SPX) itself is the most important indicator, because even if all the other indicators are saying one thing, but $SPX is not confirming, then $SPX is right.
At the current time, $SPX is breaking out in a bullish manner, but the other indicators -- for the most part -- are not in agreement. Can $SPX carry the weight all by itself? Yes, because anything is possible, but that's not the ideal situation.
