The equity-only put-call ratios for the S&P 500 Index (^SPX) are still rising. Even though SPX recently rallied, traders were still buying puts as hedges, if not necessarily for pure speculation. These ratios will remain on their sell signals for the stock market until they roll over and begin to decline, advises Lawrence McMillan, editor of Option Strategist.
The market overall continues to consolidate in the triangle formation that we had pointed out previously. It tried to break out on the upside last week. In a broad sense, a breakout above 7,500 would be positive, while a breakdown below 7,300 would be negative.
A more positive note has been the improvement in breadth recently. The NYSE-based breadth oscillator has remained on a buy signal for a few weeks, even though the “stocks only” breadth oscillator just recently joined in with a buy signal of its own.
The CBOE Volatility Index (VIX) dropped below 17 last week. That is enough to keep both buy signals that are related to the VIX chart in place.
In summary, we have a bullish plurality from our indicators. But for a truly bullish move, we need confirmation from the SPX chart -- first via a move above 7,500 and then eventually a breakout to new all-time highs.
