The $SPX chart remains positive in that it is above the trendline from the March bottom. Near-term support exists at 1130 (see chart, Figure 1) and then at 1115 -- the low of the last-day selloff of 2009.
The equity-only put-call ratios have hopefully shrugged off the effects of the heavy hedging activity of last summer and resumed being useful indicators. They remain on buy signals.
Market breadth has been strong since the beginning of the year, pushing into overbought territory. That is positive news.
Volatility indices ($VIX and $VXO) have continued to decline, and that is bullish. The downtrend since mid-December is most noticeable on the $VIX chart (Figure 4) and as long as that remains intact, the implications are bullish.
In summary, the conditions for a further rise in prices remain intact. None of the indicators are on sell signals, although overbought conditions warn of potential short-term corrections.
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.
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