As $SPX has recovered from its July 19th lows and driven to new all-time highs, not a lot has changed regarding the overall picture. It's still the big-cap tech stocks leading the way, as the NASDAQ- 100 ($NDX; QQQ) and Dow ($DJX; DIA) are near all-time highs as well. But the internals of the market are still weak as manifested in the Russell 2000 Index ($RUT; IWM).
Technically, the chart of $SPX remains strong. There is potential support at 4233. If that gives way, then the chart will no longer be considered bullish. There is further support below that, at 4165 and 4060, both levels which have been tested as valid support.
One primary area of internal weakness is the equity-only put- call ratio data. Put buying has remained relatively heavy during the month of July, and these ratios continue to rise. That means they are on sell signals.
Another area of internal weakness has been breadth. Breadth has improved quite a bit since the July 19th lows and both breadth oscillators are on buy signals, but not at the levels one would expect with $SPX making new all-time highs.
Contrasting the negative internals implied volatility generally has remained a friend to the bulls. $VIX has not exploded for any length of time, and even if it does, a new "spike peak" buy signal quickly follows.
In summary, the bullish case is still intact, as long as $SPX continues to remain above 4233 and as long as $VIX is trending lower. Having said that, we will trade various sell signals alongside that "core" bullish position when they are confirmed.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.