The stock market didn't seem to care much about the government shutdown. This is a government spending shutdown and is not nearly as negative for stocks as would be a government default. The S&P 500 Index (^SPX) has support at the various areas denoted by red horizontal lines on the chart, including 6,550...6,500…6,346-6,360…and 6,200, highlights Lawrence McMillan, editor at Option Strategist.
In general, the stock market seems to drop initially and then moves on to other things. This time, there have been nothing but higher highs by SPX since the shutdown began. These are all-time highs in fact.
I would think that a drop below 6,500 would generate some additional selling. That is the area that was finally overcome in early September after the S&P toyed with that level as resistance for much of August.
Equity-only put-call ratios continue to decline, and that is bullish for the broad market. Even though these ratios are nearing the lower end of their charts, and the standard ratio is the lowest it's been since December 2021, that is merely an overbought condition. Overbought conditions can exist for a long time in a strong bullish environment.
Breadth – at least in terms of the number of issues advancing and declining – has been lagging. As a result, the breath oscillator sell signals that were generated a week ago are still in place. But we continue to maintain a bullish attitude based on the SPX chart and most of our indicators.
