S&P 500 Hits New Highs Amid Signs of Overbought Conditions

Key Takeaway
S&P 500 hits new highs but shows signs of overbought conditions; support levels identified at 4,950 and 4,800.
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Market Pullback
The S&P 500 index, after hitting new all-time highs, has experienced a slight pullback this week. The index's recent performance has been impressive, with new highs set on 13 of the last 25 trading days. The index is currently resting at 4,983, with potential support levels at 4,950, 4,920, and 4,850. Stronger support is seen at 4,800, a key resistance area in recent months. The index has not breached the +4σ "modified Bollinger Band," indicating a classic sell signal remains in place. Equity-only put-call ratios are near recent lows, signaling an overbought state but not yet triggering sell signals. Breadth indicators have been strong enough to avoid a sell signal, with new highs dominating new lows on the NYSE. The Cboe Volatility Index (VIX) has dropped to benign levels, maintaining a "spike peak" buy signal. Volatility derivatives continue to support a bullish outlook for stocks, with upward-sloping term structures and VIX futures trading at a premium to VIX. $S&P 500 Index (.SPX.US)$ $Nasdaq Composite Index (.IXIC.US)$ $CBOE Volatility S&P 500 Index (.VIX.US)$