This week's rally has improved the status of many of the indicators, but not necessarily the chart of $SPX itself. A breakout above resistance and the 200-day moving average at 1265 would be required in order to turn this chart positive.

Equity-only put-call ratios have turned bullish.

Market breadth swings the most wildly as these volatile moves occur. Currently, breadth indicators are on buy signals and are not yet overbought.

Volatility indices ($VIX and $VXO) have been more subdued than the actual market. Each previous time in the last two months that $VIX has gotten below 30, the market has sold off almost immediately. One of these times, it won't, of course, but it remains to be seen if this is that time.

At this point, we are giving the bullish case the benefit of the doubt as long as $SPX can remain above 1220.

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.