The chart of $SPX has developed a very interesting characteristic: there is a rising channel, called a "pennant," on the chart. A breakdown below the lower boundary of the channel creates a very negative technical formation.

Equity-only put-call ratios, meanwhile, are quite bullish. They rolled over to buy signals last week and continue to decline.

Volatility indices ($VIX and $VXO) have been stubbornly staying at high levels. There was a spike peak buy signal again this week.

In summary, the buy signals from put-call ratios and $VIX offer a positive short-term picture, but there are other negative factors present as well -- the most dangerous of which would be break below 1140, violating the lower end of the channel.

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.