Stock investors head into November saying thanks to a market that keeps on giving

The article expresses an overall bullish sentiment for the S&P 500, supported by recent chart strength, new highs in cumulative volume breadth, and buy signals from VIX and volatility derivatives term structures, with key support identified at 6,750. However, it advises caution due to conflicting signals, including elevated realized volatility, weakening traditional market breadth, and a standing McMillan volatility band sell signal. Actionable recommendations include buying ProShares Short VIX Short-Term Futures ETF (SVXY) calls based on a large VIX futures premium and Whirlpool (WHR) calls if the stock closes above 75, following a new put-call-ratio buy signal.

Analysis

The S&P 500 (SPX) has demonstrated significant strength, gapping higher and establishing new support at 6,750, with further robust support at 6,500-6,550. This bullish momentum is strongly confirmed by cumulative volume breadth (CVB) hitting all-time highs on October 24 and 27, aligning with SPX's new peaks. Furthermore, implied volatility (VIX) has normalized to approximately 17, triggering two distinct buy signals and indicating a fully bullish position in volatility derivatives term structures.

Despite the SPX's outward strength, several internal market indicators present a cautious outlook. Traditional market breadth has weakened considerably, with the NYSE-based breadth oscillator signaling a sell and the "stocks only" oscillator nearing a new sell signal. Additionally, the McMillan volatility band (MVB) sell signal remains active, and realized volatility (HV20) has stayed elevated since October 10, typically a negative for stock prices.

The article maintains an overall bullish stance while emphasizing the importance of trading confirmed signals. The large premium on VIX futures, indicated by VOLFUTA at 2.30, creates a tactical opportunity for ProShares Short VIX Short-Term Futures ETF (SVXY) due to time decay. Upcoming earnings for Palantir (PLTR), Uber (UBER), Qualcomm (QCOM), and DraftKings (DKNG) present potential volatility plays, with median moves ranging from 4.4% to 17.8% of stock price.

Key Decisions for Investors

• Maintain a bullish market posture, but closely monitor the SPX 6,750 support level, as a break could signal a significant negative shift.
• Consider tactical opportunities in volatility products, specifically buying SVXY (Nov. 21) 50 calls given the current large VIX futures premium (VOLFUTA at 2.30), with a stop if VOLFUTA falls below 0.50.
• Evaluate a long position in Whirlpool (WHR) via (Dec. 19) 75 calls if the stock closes above 75, leveraging the new weighted put-call-ratio buy signal.
• Exercise caution due to conflicting internal market signals, such as weakening traditional breadth and elevated realized volatility, which could precede a "rounding" market top.