MW The stock market wants badly to hit an all-time high. And the S&P 500 can get there.

By Lawrence G. McMillan

Technical indicators point to more upside for the U.S. benchmark index

The S&P 500 SPX has broken out over the downtrend line that connected its February and May highs. This should push the index to challenge all-time highs at 6,150.

There are several support areas below here, from 5,940 down to 5,700.

Many, but not all, of our indicators are bullish. One that is still bearish is the McMillan volatility band $(MVB.AU)$ sell signal, which is marked as a green "S" on the SPX chart below. It would be stopped out if SPX were to close above the +4<SIGMA> band, and that band is now tightening because realized volatility continues to decrease. This band currently is at 6,100 and declining.

Equity-only put-call ratios continue to decline, although their rate of descent has slowed considerably over the past two weeks. At face value, that means they remain on buy signals for stocks. In fact, they won't issue sell signals until they roll over and begin to trend higher.

In addition to viewing the charts, we also use computer analysis programs to help in determining whether a minor blip in the ratio is going to become a change in the trend. These analysis programs say that both ratios are on sell signals. In other words, small numbers are coming off the 21-day moving averages, and, if "normal" numbers come into the averages, they will rise. These computer sell signals are marked with a circled "S" on each chart. For the record, I want to see visual confirmation of a rising ratio before considering it to be a valid sell signal.

Market breadth has improved greatly over the past week. That was enough to stop out the previous breadth sell signals from the breadth oscillators. Now those oscillators are in overbought territory. That can be a good development when SPX is breaking out to new highs or starting a new uptrend. But if breadth were to deteriorate from here, those sell signals could emerge once again.

Read: Stocks, bitcoin and gold are racing to record highs. Here's what's behind this rare convergence.

Cumulative volume breadth $(CVB.AU)$ has made new all-time highs on multiple days this week. That is in both stocks-only terms and NYSE-based terms. When CVB makes a new all-time high, SPX normally follows along to new all-time highs of its own.

New highs have continued to outnumber new lows, but not by much. Thus, this "new highs vs. new lows" indicator remains in a neutral state.

The Cboe's volatility index, or "VIX" VIX, has dropped below 18, and hence two VIX-related buy signals for the stock market are in place at the current time. The first is the "spike peak" buy signal, which was issued on March 23, when VIX briefly spiked up above 25. That signal lasts for 22 trading days, so it has some time to run, but we would stop out if VIX were to return to "spiking mode." The other buy signal - the trend of VIX - was confirmed on June 9. It will remain in place unless VIX moves above its declining 200-day moving average. That trend-of-VIX buy signal is marked with a square on the lower right of the accompanying VIX chart.

The construct of volatility derivatives remains in a mildly bullish state for the stock market. The term structure of VIX futures is somewhat positive as its slopes upward in the front end of the curve, but then it is flat after that. The Cboe volatility term structure is more bullish as it slopes rather steeply upward through.

In summary, the picture remains mostly bullish, and we would expect SPX to challenge its all-time highs of 6,150 soon. However, there are potential sell signals, which we would trade if they are confirmed. Meanwhile, continue to roll deeply in-the-money options.

Trend-of-VIX buy signal

Last week, we made conditional recommendation regarding a trend-of-VIX buy signal, but the condition was not satisfied. Subsequently, a trend-of-VIX buy signal was confirmed on June 9. That is, both VIX and its 20-day moving average closed the 200-day moving average for two consecutive days.

Buy 1 SPY SPY (July 18) at-the-money call and sell 1 SPY (July 18) call with a striking price 20 points higher.

After this position is established, stop out if VIX closes above 21 for two consecutive days.

New recommendation: Baker Hughes calls $(BKR)$

A double put-call ratio buy signal in BKR (BKR), coupled with a breakout over resistance, leads us to this recommendation to buy calls on BKR.

Buy 4 BKR (July 18) 39 calls in line with the market.

We will hold these calls as long as the weighted put-call ratio for BKR remains on a buy signal.

Follow-up actions

All stops are mental closing stops unless otherwise noted.

We are using a standard rolling procedure for our SPY spreads: In any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

For outright long options, roll if they become 8 points in-the-money.

Long 2 APH $(APH)$ (June 20) 90 calls: Raise the closing stop to 89. Roll up again at 100.

Long 8 IEF IEF (July 18) 93.5 puts: Sell these puts now, since the weighted put-call ratio for these U.S. Treasury bonds has rolled over to a buy signal.

Long 1 TSEM (July 18) 42 call: The long calls were rolled up when TSEM $(TSEM)$ traded above $42 on May 14. Roll the calls up again at 50.

Long 1 SPY (Jun 20) 591 call and short 1 SPY (June 20) 620 call: This is the position based on equity-only put-call buy signals. It was rolled up when SPY traded at 591 on May 15. These buy signals are still in effect, although waning. Roll the 591 call up to the 601 strike, keeping the 620 call where it is.

Long 2 DLR (June 20) 170 calls: Sell these calls now, since the weighted put-call ratio for DLR $(DLR)$ has rolled over to a sell signal.

Long 5 CCL (July 18) 20 calls: Sell these calls now, since the weighted put-call ratio for CCL $(CCL)$has rolled over to a sell signal.

Long 1 SPY (Sept. 19) 585 call and short 1 SPY (Sept. 19) 635 call: This is the position based on the differential between implied and historical volatility. Begin to use trailing closing stop for this position; stop out if SPY closes below 587.

Long 3 IP $(IP)$ (July 18) 50 calls: We will hold as long as the weighted put-call ratio remains on a buy signal.

Long 2 SPY (July 18) 613 calls: This position was bought in line with the buy signal in cumulative volume breadth (CVB). That signal is still in effect. CVB made new all-time highs on four recent days. The target is for SPY to eventually make a new all-time high, as well. Hold without a stop for now.

Long 1 SPY (July 18) 576 put and short 1 SPY (July 18) 525 put: This spread is based on the McMillan volatility band (MVB) sell signal that took place on May 23 when SPX traded below 5,795. The target is for SPX to trade at the -4<SIGMA> band, and the position would be stopped out if SPX closed above the +4<SIGMA> band (currently at 6,100 and falling).

Long 1 SPY (July 18) 590 call and short 1 SPY (July 18) 605 call: This was bought in line with the "spike peak" buy signal. It well be held for 22 trading days. We are changing the stop: Stop out if VIX rises by at least 3 points (using closing prices) over a one-, two- or three-day interval.

Long 6 DOUG $(DOUG)$ June (20th) 2.5 calls: We will hold without a stop while the takeover rumors play out.

We had a conditional recommendation to buy TPR $(TPR)$ puts, but the condition has not been satisfied. The recommendation is canceled.

All stops are mental closing stops unless otherwise noted.

Send questions to: lmcmillan@optionstrategist.com.

Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of "Options As A Strategic Investment." www.optionstrategist.com

-Lawrence G. McMillan

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June 12, 2025 12:00 ET (16:00 GMT)

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