A small market correction finally occurred this week, but it seems like it was nothing more than an opportunity for the bulls to buy at lower prices. $SPX once again established the 1340 level as support; in fact, it was a virtual trampoline as the index spurted higher after touching it on Tuesday.

Equity-only put-call ratios turned negative this week and remain on sell signals.

Market breadth dipped into sell signals earlier this week, but Tuesday's big down day was a "90% day," and the market has rebounded strongly from there. The breadth indicators are now back on buy signals.

$VIX remains volatile within a trading range of 17 to 22. A breakout above 22 would be bearish for stocks.

In summary, we expect that we are about to usher in a more volatile market. The upside is probably still the path of least resistance.

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.