Was the two-day selloff on Tuesday and Wednesday of this week enough to refuel the bulls? It may have been.

$SPX closed at a new high for this post-October rally, although it has not yet exceeded the 2011 high at 1370. With today's rally there is clearly strong support at 1340.

Equity-only put-call ratios are technically on buy signals. However, they edged higher over the last two days.

Breadth indicators remain on buy signals, but they are not nearly as overbought as they previously were. So, in a sense, they have been re-generated, and are not an impediment to higher prices over the short term.

$VIX is potentially another matter. It rose sharply last week, in contrast to the ever-rising $SPX. That is a bearish divergence.

In summary, the near-term overbought condition in breadth was alleviated by a two-day market decline. Furthermore, the fact that $SPX made a new relative high is positive as well. However, there are remaining overbought conditions of an intermediate-term nature, and they could be problematic soon.

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.