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The McMillan Options Strategist Weekly
By Lawrence G. McMillan | Published  08/17/2012 | Options | Unrated
The McMillan Options Strategist Weekly

This market is becoming the ultimate in defying bearish opinion. Since June 1, $SPX has advanced almost exactly 150 points and is nearly back to the yearly highs -- and therefore at a post-2008 high. Yet, bearish opinion is still rather rampant.

$SPX remains within the rising trading channel that extends back to early June. It is near the top of the channel, so in that sense, it is "overbought."

Equity-only put-call ratios continue to remain on buy signals. Market breadth indicators remain on buy signals as well, and they are into overbought territory.

Volatility indices ($VIX and $VXO) are trading at extremely low levels. While the lower trend in $VIX is bullish for stocks, the fact that $VIX is below 15 means it is overbought as well.

In summary, the market is still bullish for the intermediate-term. The overbought conditions that exist now will likely lead to a sharp, but short-lived pullback soon. That pullback will likely be a buying opportunity.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.