Free Weekly Stock Market Commentary 10/16/26

By Lawrence G. McMillan

After a slightly worse-than-expected CPI reading this week, the market finally made a move with some gusto. $SPX fell about 1.1% the day after that, with the Dow ($DJX) doing much better, but tech indices faring far worse. So $SPX is back inside the previous trading range, and the attempted breakout in earlier October is now officially a false breakout (pink circle on the chart in Figure 1). There wasn't any follow-through to the CPI-related selling, though, so now $SPX is back in a dull, trading range environment. There is resistance at 7820-7840, with support at 7580-7620.

Equity-only put-call ratios are split --at least for the moment. The standard ratio continues to climb (it made a new relative high yesterday), and thus it remains on a sell signal (Figure 2). The weighted ratio, however, is meandering lower and is thus on a buy signal (Figure 3).

Breadth had improved a week ago, but was quite poor again this week (except for yesterday). The net effect of this was that the "stocks only" breadth oscillator has stayed on a sell signal all the way along. But NYSE breadth had improved and eventually did roll over to a buy signal for the NYSE-based breadth oscillator on October 13th.

This brings us to the $VIX indicators. They are not as robustly bullish as they were, but $VIX has mostly not exhibited any real concern with the market's failure to hold that new high ground nor the market's negative reaction to the CPI numbers. The $VIX "spike peak" buy signal is still in place, but is ending today. The trend of $VIX buy signals remains in place.

Meanwhile, back at the ranch, the market is once again stuck in the trading range. We are awaiting new confirmed trading signals, but they have not emerged. A clear 2-day breakout from this trading range should produce a momentum trade of some size. Until then, continue to roll deeply in-the-money positions as they arise.