Weekly Stock Market Commentary 8/23/2019

The $SPX chart remains bearish. There is support at 2825. There is probably stronger support at 2720-2730, the area of the March and May lows. As for resistance, the major resistance area remains 2940-2950, which is not only the recent tops, but is also the psychological resistance caused by the fact that the July 2019 activity look like a false upside breakout to new all-time highs.

The equity-only put-call ratios remain on sell signals (Figures 2 and 3).

Market breadth has improved quite a bit over the past week, and both breadth oscillators rolled over to buy signals on August 16th. However, it has been a struggle to maintain these bullish levels, and the NYSE-based breadth oscillator has slipped back to a sell signal again.

As far as $VIX goes, we’re back in the same position we’ve been in for a couple of months: a strong $VIX breakout above 17 would be bearish for stocks (perhaps even more so now, if it were to happen with the 20-day MA above the 200-day MA).

In summary, the big picture still seems negative, although the short-term oversold buy signals did have their say. The $SPX chart will remain negative unless it can close above 2950, and that is the most important indicator.

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.

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