From Larry McMillan: Stocks just can’t seem to get out of their own way. Both bulls and bears have failed to capitalize on what seemingly should have been opportunities.
The bottom line is that the S&P 500 chart is stuck in a sideways trading range until proven otherwise, with resistance at 2750 and support at 2640.
Put-call ratio charts remain bullish. After Tuesday’s sharp decline this week, both ratios rose. To the naked eye, it appeared that sell signals might be emerging. But the computer analysis programs never wavered, continuing to insist that the ratios were still on buy signals — and they are.
Market breadth has been somewhat weak, but the breadth oscillators are clinging to buy signals after today’s rally.
Volatility exploded higher briefly this week. For a short time, it looked like the volatility complex might be turning quickly bearish on the stock market, but it did not for there was no follow-through. So the volatility complex remains bullish for stocks.
In summary, we continue to await a breakout by SPX. The overwhelming consensus, it seems to me from watching TV and reading the financial press, is that the market is going to break out on the upside. That alone makes me a bit worried about the downside. But we aren’t going to guess. Rather, we’ll await whatever breakout takes place and act on it accordingly at that time.