$SPX had remained in a trading range for nearly two months, but now it has broken support at 2160 and that is significant.
The only negative indicators that we had as of yesterday were the equity-only put-call ratios, but the others will join in today. As you can see from Figures 2 and 3, the put-call ratios have been edging higher since making their lows in mid-August. That puts them on sell signals.
With the holiday weekend approaching, and attendance low because of it, the bears took a couple of shots this week at breaking $SPX down below support at 2160. They came close, but they couldn't do it. Thus, the $SPX chart remains positive, with support at 2160.
Equity-only put-call ratios have been edging higher all week, and they remain on sell signals because of it. But they aren't really rising much, so the sell signals aren't strong.
Lately, there has been commentary about how the Standard & Poors 500 Index ($SPX) has not made a 1% move (using closing prices) since July 8th. That’s 36 trading days and counting, through Monday, August 29th. Is that a long time? It certainly seems like it is. It's the longest period of time without a 1% move in over two years. However, we don’t like to go by “feel,” but rather by statistics, and the statistics show something a bit different.
This week, $SPX did break down a little bit, violating the 2175 level, which had been the bottom of the tight 2175-2195 trading range that had contained prices for most of this month. But the piercing of minor support at 2175 was not significant. However, a breach of the 2160 support area would be more damaging, in my opinion.
The video of Larry McMillan's recent The Current State of Option-Oriented Indicators webinar with Investor Inspiration from August 8th is now available on their YouTube channel. In the video, Larry takes an in-depth look into our various technical indicators and discusses what they are saying about the market. Scroll down to watch the video or click here.
Stocks continue to trade in a tight, sideways range. This is a situation which will eventually lead to a breakout. Most analysts are bearish because of the low volatility and because of the fact that $SPX is near or at all-time highs. But the important part of that sentence is "Most analysts are bearish." Forget the reasons. If they are mostly bearish, the market is unlikely to accommodate them.
New all-time intraday and closing highs were registered yesterday for $SPX, the NASDAQ Composite, and the Dow- Jones Industrials. Thus the $SPX chart remains bullish as it is clearly in an uptrend, and the moving averages are all rising as well.
It is becoming commonplace to hear commentators on the business channels say something like “You need to buy protection now, for it is extremely cheap.” That is a very misleading statement. Yes, $VIX is low, but you can’t buy $VIX.
The market tried to break down this week, as $SPX finally pushed through the lower end of the very tight 2160-2175 trading range that had held it in check since mid-July. However, that feint downward was short-lived, and $SPX crawled right back up into the trading range once again. As a result, the $SPX chart remains bullish.
The major support area is 2120-2135, the top of the trading range that had held $SPX back from making new highs for over a year.
