Weekly Stock Market Commentary 7/25/2025

$SPX continues to make new highs, but oversold conditions are building. Yesterday (July 24) saw some negative internals. If they persist, sell signals will follow.

The rally that began in early April continues to drive higher into new all-time territory. There hasn’t been much of a correction, and so far the internals have held up very well. However, overbought conditions are building, so we need to avoid complacency and pay attention to the indicators.

The $SPX chart is bullish, with support at 6200 (last week’s low), 6150 (the previous highs), 6020-6060 (the gap on the chart), and 5920. These are all marked on the $SPX chart in Figure 1.

This latest advance is walking up right along the +4σ “modified Bollinger Band” (mBB). As a result, it closed above that Band (on July 23rd), and the previous McMillan Volatility Band (MVB) sell signal was thus stopped out. So, at the current time, we have no confirmed sell signals in place. Another MVB sell signal could set up, but the process has to begin anew. First, there needs to be a “classic” mBB sell signal. That will occur when $SPX closes below the +3σ Band. Today, that would take place if $SPX closes below 6340. However, we don’t trade the “classic” signals. After one occurs, we require further price movement (a decline, in this case) to generate an MVB sell signal. So, this could take some time.

Equity-only put-call ratios have reached very low levels on their charts, thus reflecting the optimism that is naturally associated with $SPX plowing ahead to new all-time highs almost daily. The standard ratio is now below its lows of 2024 and is at levels last seen in November 2021. In 2021, however, it had gone much lower prior to November. The computer analysis programs are calling the standard ratio to be on a sell signal here, but that’s because it’s so low. Personally, I need to see some visual confirmation that it has begun to rise before I would act on it as a sell signal.

The weighted ratio has fallen to a new 2025 low, but has not fallen below the 2024 lows. However, the weighted ratio curled upward yesterday, and the computer analysis programs are calling this a sell signal.