Since we last published, $SPX has broken out to new highs once again. It has held the breakout level, trading more or less sideways this week. Overall, the intermediate-term indicators are generally bullish, with the possible -- and important -- exception of the equity-only put-call ratios.

Short-term, there is support at 1010 and at 980 below there. There is an uptrend line connecting the March and June lows, and that is the demarcation line for bull/bear arguments. As long as $SPX remains above there, the bulls are still in charge. That line is currently near $SPX 960.




The equity-only put-call ratios are beginning to waver. If they roll over to sell signals, that would be significant for these can be leading indicators.



Market breadth has been positive -- extremely so. This is bullish for the intermediate-term because it signifies that the rally is broad. However, when stocks are this overbought, sharp but short-lived corrections are possible at any time.



Volatility indices ($VIX and $VXO) remain subdued and thus they are still in downtrends. That is bullish for the stock market. $VIX slipped back below 25, and thus a new downtrend line can be drawn on its chart (Figure 4).



In the short term, as long as $SPX holds above 1010, the bulls are in charge. However, if $SPX slips below there -- and certainly if it slips below 980 -- and the equity-only put-call ratios have turned to sell signals by that time, then a bearish stance would be warranted.

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.