The stock market has continued to decline rather sharply this week. As a result, the support at 1370 was broken -- yet another major support level giving way. The next major support level is likely to be 1330, which is the lows of last July.

The equity-only put-call ratios are moving to the higher levels of their charts now, and in a sense, that is oversold. However, they are clearly still on sell signals since they are trending higher.

The breadth indicators remain on sell signals, but they are oversold. t such oversold levels, a sharp, but short-lived rally is likely.

Volatility indices ($VIX and $VXO) have been a conundrum. For the most part, they haven't risen much at all, even during the worst days of decline. What is happening here is that all that protection that was being bought earlier this year is now being sold after the market has declined. That is holding down the implied volatility of $SPX puts, which holds down the price of $VIX.

In summary, the market is getting very oversold. At this point, all that would indicate is a perhaps sharp, but short-lived counter-trend rally. For a true intermediate-term bottom to form, we would need to see some actual buy signals originate. So far, that hasn't happened.

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.