Some very wide (and wild) swings have taken place in the market in the last week. Has this changed anything as far as the intermediate-term trend goes? Probably not, but it does show the power of an oversold rally.
One area that is now important as resistance is 2820 — the top of the first rally a couple of weeks ago. If $SPX were to climb above there and move higher, that would be a much more bullish sign and could change the outlook considerably.
There is potential support at this week’s lows, at 2600 and below there, the Spring lows at 2580. A drop below there would be very bearish.
Equity-only put-call ratios continue to race higher. So, even though they are oversold, they are NOT yet on buy signals.
Market breadth has really improved with the October Seasonal rally. As a result, as of the close on November 1st, both breadth oscillators have rolled over to buy signals.
Volatility has started to retreat sharply. $VIX never really bought into the market decline. There was no panic, as the $VIX spike peaks came near the 28 level — hardly a “fearful” move by $VIX. $VIX was trending higher, though, and that’s bearish for stocks.
There are a lot of buy signals in place at this time, via our various systems. So why don’t I feel like piling into the market right now? We had a lot of the same conditions in mid-March this year, when it appeared that $SPX had weathered the storm, and instead a very sharp decline of 7.2% in just weeks exploded on the market. That’s why! A breakout over 2820 would be bullish. Anything else is bearish.
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.