The S&P 500 Index (SPX) made new all-time highs recently and was flying high on the back of the Fed seemingly turning more dovish. But then September began, and the media was full of articles about how it's the worst month and traders should beware, observes Lawrence McMillan, editor at Option Strategist.
So, the first trading day of September resulted in a sharp intraday loss. However, SPX rebounded later that day, and since then, it has ploddingly moved higher and is now near all-time highs once again. The recent low at 6,360 joined with the previous week's low at 6,340 to provide a support area. As has been the case for a while, there is also further support at 6,200 and 6,150.
Equity-only put-call ratios have rolled over to buy signals. The ratios are still pretty low on their charts, but as long as they are trending down that is bullish for stocks.
Breadth has not been strong -- certainly not of the magnitude that we'd like to see with SPX making new all-time highs. As a result, the breadth oscillators are still on sell signals. They've drifted in and out of that designation, but there has not been any sustainable period of positive breadth for a while now.
The implied volatility complex has generally been in a positive state for stocks. The “spike peak” buy signal of Aug. 4 is now completed.
In summary, the SPX chart remains positive, which is most important, but not all indicators agree. We will take new signals as they occur and will continue to roll deeply in-the-money options.
