E-Wave for the S&P 500 Index

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Weekly Stock Market Commentary 4/14/2023
Posted on April 14, 2023 - 12:06pm

By Lawrence G. McMillan
The rally that began in mid-March is persisting. Market internals remain positive, and that is finally having enough of an effect on $SPX (and the market psyche) to push prices higher in a relatively slow manner. Even so, there is formidable overhead resistance at 4200 and 4300, so the $SPX chart will not be outright bullish until those levels are exceeded (in my opinion).

Below current levels, there is support at 4050 and then 3970 below that. However, if $SPX should fall below the mid-March lows of 3950, that would be a larger negative development that would probably once again call for a retest of the December low area of 3760 to 3850.

Equity-only put-call ratios continue to decline and thus they remain a bullish indicator for stocks. They won't turn bearish until they roll over and begin to rise. The Total put-call ratio is also declining, although that buy signal has a target of a 100-point rise in $SPX, and that target has been fulfilled with $SPX trading above 4150.

Breadth has not been as consistently bullish as the put-call ratios, but after some flirtations with sell signals, breadth has expanded again. Currently, then, both breadth oscillators are back on buy signals and are in overbought territory.

$VIX has continued to decline and is below 18 once again. The trend of $VIX buy signals remains in place. However, the "spike peak" buy signal has "expired."

We are not carrying a "core" position at this time, but have traded several positions in line with the internal indicators. We will continue to proceed in that manner until $SPX breaks out strongly.

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=1681755720455

http://www.optionstrategist.com/sites/default/files/PC21.JPG?v=1681755720455

http://www.optionstrategist.com/sites/default/files/PC21_W.JPG?v=1681755720455

http://www.optionstrategist.com/sites/default/files/VIX.JPG?v=1681755720455