$SPX has essentially been trading sideways for about three weeks. The net result of this sideways action has been to relieve all of the overbought conditions that existed. Thus, the stage was set for another rally attempt if the bulls had the wherewithal to break out above 1390, a feat which they accomplished Thursday.

Market breadth has not been particularly strong until the last week or so. The breadth indicators are on buy signals.

We have been watching the 17-21 zone on $VIX as an important level for some time. While $VIX was in that zone, the market was volatile but directionless. Now that $VIX has broken down below 17, we are calling the $VIX chart a bullish indicator.

The one indicator that is still on a sell signal is the equity-only put-call ratio.

In summary, it appears that the bullish breakouts in $SPX and $VIX have occurred, accompanied by buy signals from breadth. The next leg of the bull market should be underway.

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.