By Lawrence G. McMillan

$SPX has broken out above resistance at 2950, and that has changed the picture to a bullish one. There is now strong support at 2940 the top of the previous trading range that $SPX traversed six times (three up, three down) during the month of August. A close back below 2940 would be negative, because that would bring $SPX back into the trading range once again.

Teh equity-only put-call ratios remain on buy signals, and now the Total put-call ratio has joined in with a buy signal as well.

Market breadth has improved, and both oscillatorsh are now on buy signals. They are modestly overbought, which is a good thing.

Volatility indicators have turned much more bullish, along with the rest of our indicators. The $VIX “spike peak” buy signals have occurred throughout the month. Moreover, $VIX is now back below 17 again, and that is bullish as well.

In summary, with the upside breakout over 2950, the $SPX chart has turned bullish. That, coupled with equity-only put-call ratios, breadth oscillator buy signals, and a $VIX below 17, generates a positive outlook now. If any of those bullish conditions begins to reverse (especially if $SPX falls back below 2940), we’d have to reconsider, but for now we are bullish.

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

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