The Standard and Poors 500 Index ($SPX) is hovering near 1260 once again. What makes this significant is that this is the area not only of the 200-day moving average of the index, but it is also the point where the index meets the downtrend line connecting the recent market tops. A close above 1270 would be a clear upside breakout.

Both the standard equity-only put-call ratio and the weighted ratio are on buy signals.

Breadth (advances minus declines) has been less supportive. This indicator is now on a sell signal.

$VIX has been in a steady decline since October. At face value, this is quite bullish, for the stock market and $VIX tend to trend in opposite directions.

To summarize this short-term outlook, then: the bulls have everything going their way. If they can't get the clear upside breakout soon, that would be very 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.