On Friday, January 19th, the $SPX reached new all-time highs, both intraday and at closing. Since then, it has continued to climb, setting fresh closing records daily. Much of this surge appears driven by short covering and enthusiastic buying from previously underinvested longs. However, the market lacks the typical euphoria, as many individual stocks are struggling despite the index’s performance.

Having consolidated within the 4680-4800 range for nearly a month, $SPX should find substantial support in that zone. A close below 4680 would signal significant downside potential, although such a scenario seems improbable in the near term. Resistance levels are virtually nonexistent, given the index’s record-setting run.

Equity-only put-call ratios maintain sell signals for stocks, despite recent downward trends. Computer analysis still deems them bearish as long as they continue to rise, signaling caution for equities.

Breadth indicators improved alongside $SPX’s ascent, shifting to buy signals as the index hit new highs. They currently hover in overbought territory, reflecting positive market momentum. Additionally, the subdued $VIX further bolsters bullish sentiment, with no alarming spikes indicating potential trouble for stocks.

We maintain a core bullish stance, supported by the optimistic $SPX chart. We tactically trade confirmed signals while adjusting long call options upward as they deepen in-the-money. Although sell signals have been few and swiftly stopped out, we anticipate more to emerge should the market show signs of topping out. February historically carries risks, with 2018 and 2020 being particularly tumultuous, thus vigilance remains essential.

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