$SPX is now approaching the 920 resistance area once again (support is at 850-860). A breakout above resistance or a breakdown below support would be significant. The $SPX chart is current somewhat neutral as the index is bouncing between those support and resistance levels, in a trading range.



The equity-only put-call ratios are positive. They had been moving sideways for a couple of days, but now have resumed their downward trend once again. As long as they are trending downward, they are on buy signals. They still have quite a ways to run before one would consider them to be "overbought."



Market breadth has improved dramatically this week. As a result, the recent breadth sell signals have been canceled.



Volatility indices ($VIX and $VXO) continue in downtrends as well. $VIX closed at its lowest level since September. A downtrend in $VIX is also bullish. However, it should also be noted that $VIX is still at 40, and that is a very high number for volatility.



In summary, the current upward momentum in the market could continue, since we have buy signals on most of our indicators. A breakout above 920 would be very positive. No matter how strong this rally proves to be, we still do not think the bear market is over; we expect the November lows to be tested again in the coming months.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.