In a market overtaken by central bankers, where fundamentals don't work (or work inversely because the worse the data, the greater the central bank stimulus and/or jawboning) traders are flying blind and hoping that at least technicals can provide some information.
Courtesy of BofA's chief technician, Stephen Suttmeier, below is a summary of what the latest charts say, and why he believes that the "overbought", "complacent" market has support around 2018-2002 and resistance is at 2075-2085.
SPX extends overbought grind higher
The S&P 500 continues its grind higher with daily Williams %R overbought and the month-long rising channel intact. The set-up is similar to late-October/early-November and the tactical bulls have control as long as Williams %R is overbought and the short-term up channel holds. Channel support is 2002 today and moves to 2009-2008 on Monday. Channel resistance comes in at 2074.50 today and moves to 2081 on Monday. The S&P 500 closed above the 61.8% extension of the double bottom near 2033, which puts the double bottom target at 2085 into focus. The 200-day MA is still falling and near 2018 – we would view a close below that MA as potentially bearish.
In other words, the market will continue to be overbought as long as it remains overbought, the very definition of momentum: this is a carbon copy of what happened during the last sharp leg higher in late October, which fizzled in the first week of November.
And an interesting tangent from Suttmeier: the market is again, after all the volatility experienced in the start of the year, oddly complacent.
An overbought VXV/VIX ratio corroborates the low put/call
The VXV/VIX ratio is back into overbought above 1.20 and the highest since late December. In terms of sentiment, this is tactical contrarian bearish reading as investors do not expect an immediate increase in volatility. This corroborates the extremely low level of the CBOE 10-day total put/call ratio highlighted in Chart Talk: 15 Mar 2016. In fact, the 5, 10, and 25-day put/call ratios are all well below 1.0, which is complacent.
Finally, here is a recent interview with Suttmeier by Canada's BNN:
http://bmplayer-a.akamaihd.net/shareable/embedssl.html