By Lawrence G. McMillan

The huge rally in stocks that began on October 4th, 2019, is in jeopardy. A couple of large down days have broken the steepness of the uptrend, but not the uptrend itself.

So, the $SPX chart is weakening, but hasn’t completely capitulated to the bearish case yet. There is resistance at 3340 (the all-time highs) and there is support, as noted, at 3210. So if it continues to bounce around in that range, it would just be “re-generating,” but a breakout in either direction should be significant.

Equity-only put-call ratios remain on sell signals. The computer analysis programs had declared more than a week ago that these were on sell signals, and they were correct in that analysis. Now, however, the sell signals are more visible to the naked eye.

Market breadth has been poor, and both breadfth oscillators are on sell signals.

$VIX closed above 16 on January 27th, and that gave us the sell signal we’ve been talking about for some time. This establishes an intermediate- term uptrend in $VIX which will remain intact as long as $VIX continues to close above 15.

So, for the most part part our indicators are bearish, and a “core” bearish position is warranted. An $SPX close below 3200 would add fuel to the fire.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.

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