The stock market continues to mark time, in the wake of the massive overbought condition that arose on September 14 -- right after the Fed announced the latest round of Quantitative Easing. This type of action will, in my opinion, lead to a rally to new highs.

$SPX remains well within the bullish channel that has defined this market since the early June lows.

Equity-only put-call ratios are a bit mixed. The standard ratio remains on a buy while the weighted ratio is technically on a sell signal. However, unless there is a breakdown in the $SPX chart, we would not act on any sell signals from other indicators.

Volatility indices remain low and in downtrends. That is bullish for stocks.

In summary, we view the current action as a minor corrective phase, prior to an upside breakout to new highs.

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.