The broad stock market confirmed the breakout over 4200, with only a minor consolidation. Now it is attempting to break out above 4300, which is the next resistance level. If that is accomplished, then there should be somewhat clear sailing overhead for a while.
Equity-only put-call ratios remain bullish, as they continue to fall. They are in overbought territory, but "overbought does not mean sell."
Breadth has expanded nicely this week, as small-cap indics as well as the Dow (and many other NYSE-listed issued) have taken over the leadership from the AI and tech stocks. That is always healthy for the market. The breadth oscillators are overbought, but again not on sell signals.
A new buy signal has been issued by the "New Highs vs. New Lows" indicator, since New Highs outnumbered New Lows on the NYSE and were greater than 100 on two consecutive days. This buy signal will remain in place until New Lows outnumber New Highs for two consecutive days. The last buy signal from this indicator was in January and was not successful. But there is still a good track record for these signals.
$VIX has dropped to levels last seen in January 2020, before the pandemic crisis. That makes $VIX somewhat overbought too. But the trend of $VIX buy signal is still in place (the "spike peak" buy signal expired successfully).
The construct of volatility derivatives remains strongly bullish as well, since the term structures slope steeply upwards.
In summary, we are carrying a "core" bullish position now that $SPX has broken out to the upside, and we will be trading other individual system signals around that.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.