First, let's review the intermediate-term indicators, for longer-term traders may want to stick primarily with them. The $SPX chart is in an uptrend, and will remain so as long as the index is above its rising 20-day moving average.





The equity-only put-call ratios remain solidly on buy signals.




Market breadth is back on buy signals again, and only modestly overbought.




The major trend of $VIX is still down, arguably. That is bullish as well.




Those are the reasons to be bullish.

What concerns me, though, is the number of negative divergences that have occurred -- along with the modest overbought condition of the breadth oscillators. These include cheap stock options, $VIX edging higher, among others.

Even though the intermediate-term remains bullish, a sharp short-term selloff seems likely in light of these divergences.

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.