Just over a week ago, $SPX was probing the upper end of the trading range, a few days after a strong rally on Veteran's Day. But upside momentum slowed, and selling set in. Since then, the selling has fed on itself with ample aid from a series of unsettling news:
1) the continuing European debt crisis
2) the lack of results by the Super Committee
3) the MF Global bankruptcy.

The $SPX chart has violated support at 1220 and 1190, which has turned the chart negative.

Equity-only put-call ratios continue on the sell signals that arose over the past couple of weeks.

Market breadth oscillators are on sell signals, too. However, they are quite oversold.

Volatility indices are in an uptrend (see $VIX chart) and that is bearish for stocks.

Oversold conditions have reached extreme proportions and therefore a sharp, but perhaps short-lived rally is possible almost immediately. However, intermediate-term signals are now bearish.

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.