Despite some selling this week, support at $SPX 1080-1085 has once again held, and therefore the overall bullish trend of the market persists. Some of the technical indicators have weakened, but as long as that support holds, they are not important. On the upside, the resistance at 1110 remains in place as well.




Our breadth oscillators have given six separate sell signals over the last month, as $SPX has been unable to break out on the upside. That is certainly a negative sign, and those sell signals remain in place today.



Equity-only put-call ratios have been unreliable ever since heavy hedging activity began last summer. That activity seems to be abating now, so we are tentatively looking to use the equity-only ratios as trustworthy market indicators again. They, too (like breadth) have generated sell signals this week.



Volatility indicators are more positive. Volatility indices themselves ($VIX and $VXO) continue to decline, and that is generally bullish for stocks.




In summary, both bulls and bears are frustrated -- and will likely remain so until a breakout occurs.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.