Free Weekly Stock Market Commentary 9/4/26

By Lawrence G. McMillan

After making new all-time highs on August 14th, $SPX has struggled a bit. There is a very minor downtrend line on the chart right now, after a series of negative days accompanied in general by terrible breadth. That pullback seems to have culminated with a retest of the 7600-7620 support level this past Tuesday, September 1st. That support level is marked with a thick red horizontal line on the $SPX chart in Figure 1. If it gives way, a much more negative picture will emerge, but so far support has held.

As for resistance, one can see (from the same chart), that there is a minor downtrend line in place (thin red line). So that represents resistance all the way up to the all-time highs, just above 7800. A clear breakout over 7800 would be quite positive.

Market internals have remained mixed this week, even after $SPX bounced off the 7600 level. For example equity-only put-call ratios have curled upward, and both ratios are now considered to be on sell signals by the computer programs that we use to analyze these charts.

But, while the situation in put-call ratios has been deteriorating, we have finally seen some improvement in breadth. There were a lot of negative breadth days between August 17th and September 1st. But now, over the past two days, breadth has completely reversed and has been very positive. That was enough to generate a new buy signal from the NYSE-based breadth oscillator. The "stocks only" oscillator still needs at least another day of improvement before it can agree on that buy signal, though.

$VIX has remained fairly subdued and thus is in a bullish state for the stock market. The trend of $VIX buy signal for stocks remains in place because $VIX has not closed above its 200-day Moving Average.

In summary, the $SPX chart remains positive after a successful retest of support at 7600. The $VIX indicators remain positive as well. That is enough to keep us in the bullish camp, despite some lack of enthusiasm from the internal indicators. We will continue to trade individual signals as they occur. Also, continue to roll deep in-the-money options.