Late last week, the Standard & Poor’s 500 Index finally exceeded what had been firm resistance at 1,850 and closed at new all-time highs for two days in a row (Thursday and Friday).

Normally, a two-day close is enough to solidify and confirm a breakout. However, the Russians threw a bit of a monkey wrench into the mix by stirring up problems with Ukraine. That caused the S&P 500 SPX, -1.11% to tumble back below the 1,850 breakout level — which quickly begged the question, “Was this a false breakout?”

Today’s action has clearly shown that it was not a false breakout, but it was a fair question from yesterday’s point of view. Basically, the broad market is still operating off the double buy signals from the VIX “spike peak” trading system and the “modified Bollinger Band” trading system generated in early February. They’re marked on the SPX chart below.

Since there is no overhead resistance when an index or a stock is at new all-time highs, it is necessary to look for other measures than might indicate when it is so overbought that it needs to correct. In that regard, the “modified Bollinger Bands” (mBB) are useful. The upper mBB is currently near 1,880, so that might be a first target for this now-restored breakout. On the downside, there is support at 1,825 to 1,835 (yesterday’s low). A breakdown below 1,825 would be very negative, now that the upside breakout seems to have been restored.

Equity-only put-call ratios continue to be bullish. Both ratios rolled over to buy signals last week. Actually, they peaked before that, but their descent was so slow that it was not completely clear that a peak had, in fact, been formed. A heavier-than-normal demand for protection was part of the problem. Heavy put buying during a rising market is not normal, and it reflects a heavy demand for protection by hedgers. That was occurring in late January and early February, even after the market had bottomed. Hedging demand still remains rather strong, but not as strong as it was a month ago.

Market breadth (advances minus declines) has been exceedingly strong in the past month. As a result, the breadth oscillators that we follow had become extremely overbought by late last week. The stock market can — and often does — continue to advance during an overbought condition, but that condition does indicate that the chances of a sharp, but short-lived correction are increased. Without knowing anything about Ukraine or Russia, one could view yesterday’s brief market downturn as one of those sharp, but short-lived corrections. That’s certainly how it appears to be playing out.

Volatility indexes VIX, -2.38% XX:VXO (VXST) have been languishing at relatively low levels for a few weeks now. As long as they are subdued, stocks can rise. Yesterday, they all spiked higher, but have retreated sharply today. It seems to me that as long as VIX is below 16, stocks won’t have any problem rising. If VIX climbs above 16, it is then possible that an uptrend would be forming in VIX, and any upward trend in volatility is negative for stocks. But as long as VIX continues to fumble along below 16, it is not an impediment to rising stock prices.

The 20-day moving average of VIX had been rising up until about two weeks ago. But now that it is declining, that is more evidence that VIX is not in an uptrend. In other words, that’s bullish for stocks.

Yesterday saw VXST (the Short-Term Volatility Index) close above VIX for the first time in a while. We have recently done some research on this topic and have determined that when that happens, the broad stock market (SPX) gets a new burst of actual volatility. Thus, straddle buys are relevant. That might have been a good idea at Monday’s close, but it probably isn’t as good today.

The construct of VIX futures continues to paint a bullish picture. All of them are trading at premiums to VIX, and the term structure slopes steeply upward. Those are bullish signs. In addition, VXST now has listed futures as well. These are weekly futures, extending out for the next four weeks. Hence their term structure and premium levels are much tighter than VIX futures because of the decreased period over which their spectrum extends. Even so, they display the same features: All of the VXST futures are at a premium to VXST, and their term structure slopes upward.

In summary, we have only buy signals. There are no sell signals from the indicators that we follow. A few overbought conditions could deteriorate into sell signals, but we are loath to anticipate anything like that, for it could be injurious to one’s wealth.

The bottom line is that the intermediate-term picture remains bullish.

Lawrence G. McMillan is president of McMillan Analysis Corp. He is an experienced trader and money manager and is the author of the best-selling book, “Options as a Strategic Investment”and editor of the “MarketWatch Options Trader”newsletter.

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