By Lawrence G. McMillan

$SPX made a new all-time closing high this week. The $SPX chart is strong and bullish, although the internals as represented by some of the other indicators are not nearly as strong.

There is support at 2890 and 2870, with major support at 2800. It seems to me that a break of 2870 support would be a problem.

Both equity-only put-call ratios remain on buy signals. They have moved strongly lower this week, after the new highs were made in $SPX. That is, there has been a strong increase in call buying this week, as far as stock options go. Both ratios are now making new lows for this move in 2019, making them both overbought.

Market breadth has been quite lackluster for a couple of weeks now. As a result, the breadth oscillators are back on sell signals again.

Volatility, however, is very bullish. If you’re looking for a place where complacency reigns, this is it. $VIX has spent the entire month of April closing between 12 and 14. It may seem that 17 is far away from current $VIX levels, but that’s still the place where we think $VIX has to exceed in order for $VIX to become a bearish stock market indicator.

In summary, the $SPX chart looks fine. $SPX is the dominant indicator (many times it’s held steady while the other indicators have faltered), so that keeps the short-term outlook bullish. However, if support should be broken, the states of the other indicators will be more important, and a sharp market correction could develop.

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

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