This past week saw the market move higher after a minor correction on May 24. But most corrections have been minor for quite some time continuing to fuel our theory that there remains a large contingent of under-invested money managers out there. If and when they become fully invested, then a more severe correction might take place.

For now, $SPX has once again solidified support in the 1500-1510 range. There are a number of items lending support in that area: the 20-day moving average, the weekly low from last week's minor correction, the series of daily lows in early May, and the Chandelier moving average (a volatility-based trailing average). So, as long as $SPX holds above that support level, the bullish case is still intact -- despite what any other indicators might be "saying."



The equity-only put-call ratios have weakened and are arguably our most bearish indicators now. They were excellent in generating buy signals near the first of April, but now they have become extended. The weighted ratio generated a confirmed sell signal (see Figure 2). However, the standard ratio -- while appearing to have rolled over and begun to rise (the definition of a sell signal) -- is not yet confirmed as a sell signal by our proprietary computer software that "analyzes" all of the put-call charts. That software is often very good at predicting or verifying turning points.



Market breadth (advances minus declines) has improved with the rally this week, thus canceling out their recent sell signals.

The volatility indices ($VIX and $VXO) are in a neutral state, as they continue to meander in the 12 - 14 range.



Some seasonal factors also helped the market in the past week -- the Memorial Day Holiday and the end of the month. Those have passed now, though, and there isn't any short-term seasonal factor in play currently.



In summary, there is only one confirmed bearish indicator right now -- the weighted equity-only ratio. Others could easily roll over to sell signals without much problem, but even so, it is the trend of $SPX that is most important. That is, price action is the most important indicator, and -- as long as $SPX remains above support at 1500-1510 then we will remain long.

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.