Weekly Stock Market Commentary 7/3/2025

$SPX continues to make new all-time highs, and our internal indicators are improving. This is not a false upside breakout.

The stock market, has continued to rise, registering new all time highs repeatedly. It appears that the current breakout to new all time highs is stronger than the failed one of last February. There is support at 6150 (the old highs), 6020 (the highest circled gap on the accompanying $SPX chart in Figure 1), and 5920. A pullback below 5920 would negate the current upside breakout, but I don’t expect that to happen.

There technically is no traditional resistance when $SPX is at new all time highs, but we sometimes use the +4σ “modified Bollinger band” as a target of sorts. $SPX is above that band, so the previous McMillan volatility band (MVB) sell signal was stopped out for a loss. However, what we call a “classic” sell signal is setting up. We don’t trade those, though, for they have a history of whipsaws. A “classic” sell signal will occur when $SPX closes below the +3σ band. That would occur today on a close below 6168, but that “target” moves daily. Even if that did occur, there would have to be further downside movement in order to confirm a new MVB sell signal, which we would trade.

The market internals are strong. This is in stark contrast to the upside breakout in February when they were not. Equity only put call ratios had been on a sell signal, but that has been stopped out by the fact that both ratios have moved to new relative lows – below the June lows. So, they are once again on buy signals in overbought territory. They would have to roll over and begin to trend higher in order to register new sell signals.