E-Wave for the S&P 500 Index

[RCKS]

Stock Market Commentary 04/06/23
By Lawrence G. McMillan

"The fact that $SPX broke over the downtrend line that had existed for most of February and March doesn't necessarily mean that the $SPX chart is outright bullish, though, for there is formidable resistance at both 4200 and 4300. It's just not a bearish chart right now. Several indicators are overbought at this time, and some of them might be issuing sell signals soon. In addition, $SPX has advanced above its +3å "modified Bollinger Band."

There is minor support near 4050 with stronger support at 3970 (where the small gaps on the $SPX chart would be filled). A close below 3950 would be bearish, though, as it would more or less negate the positive work that was done over the past couple of weeks.

Equity-only put-call ratios remain on buy signals after faltering a bit this week. The ratios turned up modestly for a couple of days but have now moved back down to a new relative low as of yesterday thus solidifying the recent buy signals. The Total put-call ratio remains on a buy signal as well. These indicators will remain bullish for stocks as long the ratios continue to decline.

Breadth, however, has become something of a problem. Breadth was tremendously positive during the rally, with positive breadth on every one of the seven trading days between March 24th and April 3rd. Since then, however, there has been a vast deterioration in breadth, and the breadth oscillators are on the verge of rolling over to sell signals. They would do so if breadth is negative today.

$VIX continues to remain at low levels. That means the that the "spike peak" and trend of $VIX buy signals remain intact. The only potential problem is that $VIX is once again at or below 19. Over the past year, that has generally been an oversold condition that has manifested itself in a decline in $SPX sometimes minor, sometimes more serious.

Overall, we exited our "core" bearish position when $SPX rose above resistance at 4080, simultaneously breaking the downtrend line from February and March. However, the $SPX chart is not bullish. Meanwhile, we will continue to trade signals from our individual internal indicators as they arise."


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Weekly Charts
S&P 500 (SPX), CBOE Market Volatility Index (VIX), 21-Day Equity Only Put Call Ratio (PC21), and Weighted 21-Day Equity Only Put Call Ratio (PC21 w) charts updated each Friday.

http://www.optionstrategist.com/sites/default/files/SPX.JPG?v=1681098935066

http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1681098935066

http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1681098935066\

http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1681098935066