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By Lawrence G. McMillan

The Standard & Poors 500 Index ($SPX) is now trapped in a very narrow range, between 2700 and 2740. A breakout above 2750 would be very positive, while a break DOWN below 2630 would be very negative. For most of the rest of the indicators, everything is bullish. But as subscribers know, $SPX is the most important indicator.

For example, the put-call ratios are solidly on buy signals as they continue to fall almost daily.

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Market breadth was been decent — not terrific, but decent. As a result, both breadth oscillators remain on buy signals in modestly overbought territory.

Volatility remains one of the most bullish indicators we have. Essentially, $VIX has been in downtrend since the end of March (blue line in Figure 4). That is bullish for stocks. Moreover, once $VIX fell back below 15, it has stayed there no matter what. That is also bullish.

In summary, it seems like we’ve been saying the same thing for a while, but the market hasn’t made a strong enough move in order to change anything. This stalemate will end (hopefully) if $SPX can break out over 2750 — a bullish resolution to the ennui — or fall below 2630 (a bearish resolution). But neither the bulls nor the bears have been able to garner momentum when it seemingly is presented to them.

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

The Option Strategist Newsletter $29 trial

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