The S&P 500 broke out of a narrow trading range after Nvidia's earnings, and options-market signals point to a further move higher — even as market breadth stays weak.
S&P 500 clears its range
The S&P 500 climbed 0.5% on Thursday to close above the top of its recent range, which had confined the index between 7,640 and 7,700 after its all-time highs in August. Nvidia's upbeat earnings appeared to be the catalyst, with the chipmaker's shares up 8.74% on the day.
A close above 7,740 would be especially positive. The index reached an intraday high of 7,741.27 on Thursday before closing at 7,730.99. A close below 7,600, by contrast, would be a big problem for the index.
Options signals turn bullish, but breadth lags
Equity-only put-call ratios remain bullish and continue to fall, meaning bullish call-option activity is rising relative to bearish put volumes. The Cboe Volatility Index, which tends to rise when stocks fall and ease when they rise, has stayed subdued. It has been trading mostly in a 15-to-16 range, well below its longer-term average of closer to 20, keeping its trend-following buy signal for stocks intact.
However, breadth has recently been negative, meaning most stocks were actually declining even as the index rose. As a result, breadth oscillators remain on sell signals.
Fed speech looms over the rally
The market still has to contend with Federal Reserve Chairman Kevin Warsh's Jackson Hole speech on Friday, the next test for the index's breakout attempt.
Source: MarketWatch (Opinion)
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