Wednesday, November 1st, 2007
Stock Market
The $SPX chart continues to show support at 1490. Admittedly,
that support seemed a long ways away after Wednesday's close near
1550, but after Thursday's big decline, that support level is once again
within sight. If $SPX closes below 1490, it would a cause for concern,
but on a more positive note, as long as it continues to close above
there, the chart is bullish.
A week ago, the equity-only put-call ratios were on the verge of
sell signals, but that has changed. The weighted ratio dropped to new
lows this week (see Figure 3). The canceled any pending sell signals,
but does leave the ratio in an overbought condition. The standard ratio
has not accompanied the weighted ratio to new lows (Figure 2), but it
has rolled over and started to trend lower again. That also cancels its
sell signal of last week.
Market breadth had been working its way into positive territory
through Wednesday, but Thursday's large decline has resulted in both
breadth once again registering sell signals.
Volatility indices ($VIX and $VXO) had seemingly been in a
bullish downtrend, since peaking near 24 a couple of weeks ago.
Wednesday's $VIX close below 19 was also below the 20-day moving
average. The bullishness of that data was wiped out by a huge rise on
$VIX on Thursday. Once again, $VIX rose to 24. It would be
negative if it closes above that level, but as long as it stays within the
recent 18-24 range, it can be considered neutral at least.
Even so, higher prices seem possible as long as $SPX holds above
support at 1490.
