By Lawrence G. McMillan

The oversold rally that began in mid-March continued strongly through March 29th. That day, $SPX gapped up over double resistance at 4600, and showed strong internals. But then, in a somewhat diabolical way, $SPX turned south again, showing terrible internals and plunged sharply back below 4600 as the first quarter of 2022 came to a close. If that was a false upside breakout, it was one of the bear market's best tricks.

Equity-only put-call ratios are the most bullish indicator that we have right now. They generated buy signals from extremely oversold levels in mid-March. They have continuously fallen since then, meaning they are on historically strong buy signals.

Market breadth has been terrible once again. It's virtually the opposite of the put-call ratios. Breadth just can't seem to confirm much of anything in the way of bullish signals. The breadth oscillators have flip-flopped all year, and have now rolled over to sell signals after terrible breadth on March 30th and 31st.

We are extremely interested in the trend of $VIX. For now, the intermediate-term trend of $VIX is neutral, but if $VIX climbs back above its 200-day Moving Average that would generate a new intermediate-term sell signal.

In summary, this volatile market is trying to fool both the bulls and the bears. We only have one sell signal at this time (breadth oscillators), while there are several buy signals. But that leaves a number of indicators in a neutral or "waiting" state. We will continue to trade our individual signals as they occur, but we are not recommending a new "core" position at this time.

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