Free Weekly Stock Market Commentary 9/11/26

By Lawrence G. McMillan

Stocks continue to slip after having made new all-time highs on August 14th. The 7600 support level for $SPX has now come under attack, and it was briefly violated yesterday. Today, however, the CPI number although "in line" was interpreted as a huge relief, and the market is rallying strongly. So support extends down to 7580 or so. The general support area is now 7580 7620.

Overhead, there is a downtrend line on the $SPX chart (see Figure 1) that extends from the August 14th high through the last rally's high near 7750. For the bulls to reclaim control, $SPX needs to break out over 7770 or so. There is resistance all the way up to the all-time highs just above 7800.

Equity-only put-call ratios have remained on sell signals. There was a little "wiggle" over the past week, but both ratios are now moving higher once again. They have reached their highest points since the recent sell signals occurred. As long as these ratios are rising, that is bearish for the stock market.

Breadth has been poor, to say the least. That has pushed the breadth oscillators back into oversold territory, thereby canceling out recent buy signals.

$VIX and its related indicators are much more bullish regarding stocks. For example, $VIX has not risen above its 200- day Moving Average, which is currently at about 18.30 and slowly declining. Thus, the trend of $VIX buy signal for stocks (which emanated back in June pink "B" on the chart in Figure 4) remains in place.

So, we have a very interesting set of parameters. The $SPX chart is still bullish as long as the support in the general area of 7600 holds, and the $VIX indicators remain positive. However, the fact that all of the market internals are now on sell signals is not a good sign. For now, we'll say the bulls still have the (slight) upper hand as long as $SPX is above support.