The broad market recovered quickly from this week's selling. A volatile trading range is emerging. In $SPX, the low end is just above 1180 (so that's support) and the upper end is 1220 or so.






Equity-only put-call ratios are on sell signals. The standard ratio is the stronger signal, having generated a sell signal a couple of weeks ago, and then moving steadily higher since then. The weighted ratio, however, has been less certain.





Market breadth was heavily negative this week. That alleviated the overbought conditions in breadth.





Volatility indices ($VIX and $VXO) spiked higher this week, and then dropped down again. Thus, there are spike peak buy signals on these volatility index charts (see Figure 4).





In summary, the two large "scares" of the past two weeks have put the bulls on notice that the market can go down -- even if only briefly. However, the indicators remain generally bullish, so any corrections are expected to be sharp, but short-lived.

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.