Several of the major indices have reached and held new all-time high ground recently. Pullbacks have been small, and it appears that there is still an appetite for buying, despite what might be worries from the Middle East. There is support for the S&P 500 Index (^SPX) at 7,000, the previous highs, suggests Lawrence McMillan, editor of Option Strategist.
It would not be ideal for the bullish case to see SPX pull back below 7,000, for that would raise the possibility that the upside breakout was false. But if it did, there should be support near 6,750 and then stronger support near 6,600.
Equity-only put-call ratios continue to decline at a rapid pace. There have been several days recently where call buying was heavy, and that is forcing the ratio lower even faster. As long as these ratios are declining, that is a bullish sign for stocks. There would only be trouble if the ratios were to roll over and begin to trend higher.
Breadth has been relatively strong in general, although there was some faltering late last week. Regardless of that, the breadth oscillators are remaining on buy signals at this time. The extreme overbought conditions that we previously had seen in these oscillators has been worked off.
So, we have a strong set of bullish indicators, with a few overbought conditions. Thus we are retaining a bullish posture, but will take any confirmed signals as they come along. Moreover, it is important to continue to roll deeply in-the-money call positions upwards to higher strikes where appropriate.
