The broad stock market has been under more selling pressure in the last two weeks than in the previous nine months. Intermediate-term indicators are all bearish at the current time, but after five weeks of selling, some oversold conditions have arisen.

First, the chart of $SPX is in a downtrend, and that is bearish.




The equity-only put-call ratios (Figures 2&3) have remained on sell signals since mid-April. They are racing higher now, and by their sheer height might be considered a bit oversold.



Breadth has been very negative. Breadth indicators have been on sell signals for some time.



The volatility indices ($VIX and $VXO) spiked up to nearly 20 last Friday, when the market sold off sharply on bad unemployment numbers. That was supposedly bullish, but no rally materialized, and so we view $VIX as slightly bearish at this time.

In summary, the intermediate-term indicators are negative (with the possible exception of $VIX). The oversold conditions may foster a rally, but as long as $SPX is trending downward, the bears are in charge.

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.