Most of our technical indicators remain bearish, although one must take into account the fact that we are entering a seasonally bullish 5- day period. The major indices remain below their 20-day and 50-day moving averages, and rallies would be hindered by overhead resistance.
The equity-only put-call ratios (Figures 2 and 3) are all on sell signals, as they continue to rise -- mostly without interruption. Moreover, they aren't really near the tops of their charts, so we can't even consider them "oversold." Since these are our best intermediate- term indicators, they should be heeded.
Not all indicators are bearish, however. Breadth was very negative when the market broke down from the 19th through the 24th. Subsequently, a couple of strong days have lifted breadth back to a buy signal.
Volatility ($VIX), too, has been giving mixed signals. During the latest decline, it belatedly moved to a new high, completing what lookedike a sell signal to us -- a higher high, higher low pattern (see chart, Figure 4). Yet, there was no follow-through to that move, and $VIX declined once again. It if falls below 12.30, that would be bullish (negating the sell signal), and if it rises above 14.80, that would confirm the sell signal.
In summary, we aren't seeing any confirmed buy signals and so we remain bearish.
