By Lawrence G. McMillan
The broad stock market has been able to consolidate its strong post-Brexit gains. There was a day and a half of selling this week, but a strong upward reversal by $SPX from 2074 on Wednesday leaves the bulls still in control.
However, there is frustration for the bulls, too, because $SPX has not been able to assault the all-time highs. A promising Thursday rally failed at the 2110 level, reinforcing the 2110-2120 area as strong resistance.
The bottom line on the $SPX chart is that it is in a neutral state, having mostly traded within the 2040 – 2120 range for nearly three months.
Equity-only put-call ratios are beginning to improve. The standard ratio is now on a buy signal, according to the computer programs that we use to analyze those charts.
Market breadth has remained positive enough to keep the breadth oscillators on buy signals.
Volatility indices generally continue to decline, despite some nervous feints on occasion. $VIX remains within the 13-17 trading range that has held it for most of the past three months. As long as $VIX is trendless within this range, stocks can rise.
In summary, the indicators that were bullish have held onto their buy signals. Moreover, the equity-only put-call ratios appear to be improving, as they are moving into the bullish column as well. So that leaves only $SPX as the laggard. Unfortunately, $SPX is the most important indicator, and it is mandatory that it get in synch with the others fairly soon, lest the bulls let another opportunity slip by.