The S&P (first two charts below) is closing in on some major resistance just under 960 – its Sept. 2000 downtrend line and neckline of a multi-year head and shoulders top. If it can break above that and hold, this rally could turn into a cyclical bull market, particularly if the Dow (third chart) can follow with a close above 9077. Both indexes, however, continue to be stymied by rising resistance, a potential negative. Support is 927 and 918 on the S&P, and 8570 and 8522-8530 on the Dow. The Nasdaq (fourth chart) has solidified its break above 1521-1530, which should now be support. It too is coming up on major resistance, its main bear market trendline around 1600. Internals improved solidly today, which is a positive, and the equity out-call ratio has not yet registered a bearish sub-.45 reading. The VIX (fifth chart), the options volatility index, has run along its lower weekly Bollinger Band for five straight weeks for only the fourth time in 9 years; if history is any guide in that admittedly small sample, a sharp correction should begin over the next week or so. But options players will need to show more complacency first.
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