Suddenly, the stock market started to develop "religion" about the U.S. debt situation, and sold off sharply this week.

In one sense, this is like any other "event" -- an FDA hearing or a potentially volatile earnings report: the underlying has trouble moving decisively in either direction until the event has passed.

The chart of $SPX is no longer bullish; it has turned neutral. There is support in the 1295-1300 area (today's lows and mid-July lows). Below that, there is a large support area down to the June lows at 1260.

Equity-only put-call ratios are turning bearish. They have finally been affected by this week's decline. The standard ratio is a confirmed sell, as is QQQ weighted. The weighted equity- only is not yet a confirmed sell signal.

At the current time, the breadth indicators are on sell signals and are extremely oversold.

Volatility indices ($VIX and $VXO) have finally taken notice that a potentially volatile event lies on the near-term horizon. There are higher highs and higher lows on the $VIX chart, which means that it's in an uptrend. That is bearish for stocks.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.