By Lawrence G. McMillan
The S&P 500 index was making daily new all-time highs through Monday. However, market internals were deteriorating, thereby creating a negative divergence. Now the S&P has pulled back, raising the question as to whether the top is in or not. We prefer not to get into somewhat theoretical arguments like that, instead evaluating the indicators and trading systems that are confirmed.
The SPX /zigman2/quotes/210599714/realtime SPX +0.65% chart is still bullish as long as support at 4370 holds. That support was tested Thursday morning and so far has held. However, a violation of 4370 on a closing basis would turn this indicator negative. For now, though, the SPX chart is still positive.
The McMillan Volatility Band (MVB) sell signal is still in place (green “S” on the chart). It would fulfill its downside objective if SPX trades at the -4σ Band, which is at about 4335 currently.