By Lawrence G. McMillan

Stocks continue to struggle. The downtrend of $SPX is quite evident in Figure 1, and as long as that Index is in a downtrend, a "core" bearish position can be maintained. $SPX made a new closing low this week, as it probed down towards 4100 once again. The general area of 4100 4200 still represents near-term support. Below that, the next support area (red horizontal line on chart) is at the highs of about a year ago, just below 4000.

The market is oversold and thus sharp, but short-lived rallies can occur at any time. The general area of 4350 4460 might be the "target" for an oversold rally. In my opinion, this $SPX chart will still be negative unless $SPX can break out above the resistance at 4600.

Equity-only put-call ratios have risen this week, and now both are back on sell signals, albeit in very oversold territory (meaning they are very high on their charts). Both of these sell signals are confirmed by the computer analysis programs.

Market breadth has been negative on most days, punctuated with some amazingly strong days. This past week, the large one- day rally on March 9th rolled the NYSE breadth oscillator over to a buy signal, to which it is barely clinging now. The "stocks only" breadth oscillator has not given a buy signal yet.

There are some mixed signals from $VIX and its derivatives. The $VIX "spike peak" buy signal of February 24th is still in effect, since $VIX has not closed above 37.99 since then. So, that is a positive from $VIX. One negative is that the trend of $VIX remains higher, and that is bad for stocks.

As long as the uptrend in $VIX and the downtrend in $SPX persist on their charts, we will maintain a "core" bearish position. Since the market is so oversold (almost continuously), we will trade confirmed buy signals around the core bearish position.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.