To The Moon

By Lawrence G. McMillan

The major indices are on a roll, with S&P 500 ($SPX; SPY), NASDAQ-100 ($NDX; QQQ) and now Russell 2000 ($RUT; IWM) all making new all-time highs simultaneously. Back in January and February, $SPX made a new all-time high by a few points on several occasions, but it was never able to put together a strong breakout rally as follow-through. Eventually, that was onerous, and the market fell. But now it appears to be adding to the breakout gains, which is a very positive sign.

Technically, there should now be support at 7000 (the old highs). It would be disappointing to see $SPX trade back below 7000 now, but if it did, there should be support at 6800, and then at the bottom of the gap near 6600. There is no formal resistance with $SPX at new all-time highs.

Equity-only put-call ratios are solidly bullish now. They rolled over about a week ago, and that visual buy signal was also confirmed by the computer programs that we use to analyze these charts. They will remain on these buy signals until they roll over and begin to rise.

Breadth has been very strong. As a result, our breadth oscillators remain on buy signals, but they are in deeply overbought territory. In addition to the oscillators, we have positive readings from Cumulative Volume Breadth (CVB).

Meanwhile, $VIX itself has continued to decline. It has now fallen to almost exactly the level of the 200-day Moving Average (just above 18). The fact that $VIX is hovering near its 200-day Moving Average tells us that volatility traders are still assessing this as a risky market, to some extent.

So, just about everything improved on the massive, now 800- point rally by $SPX. Some of our indicators turned bullish in time, and almost all of them are bullish now. We will continue to add positions in line with indicator signals and will continue to roll deeply in-the-money calls upward to higher strikes.