The market, as measured by the Standard & Poors 500 Index (SPX) has been in a steady decline since mid-October. There is resistance in the 1395-1410 area, and that must be overcome for the picture to become bullish. Both equity-only put-call signals have now rolled over to buy signals.

The stock market got quite oversold near the recent lows. Now, Monday's strong oversold rally gave birth to actual buy signals from the breadth oscillators.

Meanwhile, volatility indices (VIX and VXO) have been in a general state of decline, even though SPX was falling. As a result, VIX dropped below 16 this week, and that is certainly bullish for stocks.

In summary, the indicators are starting to look more bullish. The main problem is SPX itself. It does little good for the indicators to be bullish, yet for SPX to continue to decline. Hence, we are not going to turn intermediate-term bullish unless SPX can overcome resistance -- which essentially means it has to rise above 1410.

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.