The broad market ($SPX) broke out to new relative highs on Monday, eclipsing what had been resistance at the 1130 area. But rather than build on that breakout, the market succumbed to the extreme overbought conditions that had built up, and it has been unable to rise since. However, the trend of the $SPX chart is positive.





Market breadth indicators have moved from an extremely overbought status, to sell signals.




Equity-only put-call ratios both remain on intermediate-term buy signals.




The chart of $VIX has remained in an intermediate-term downtrend, but after three days of rising $VIX, that bullish (for the market) downtrend on its chart could be in jeopardy.




In summary, a close by $SPX below 1100 would be negative, while a close above 1150 would confirm the upside breakout.

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.