The stock market has had a bit rougher time this week. Our indicators are turning bearish now, and if there is a breakdown in $SPX, a full-blown correction should be underway.

This brings up the matter of whether or not the recent $SPX breakout to new all-time highs (and the Dow's as well) was a false breakout. I would not grade the recent breakout to new highs as truly false unless $SPX falls below support at 1540-1545.

It is worth noting that small-cap indices such as $RUT have already broken down and did not make new highs. Even more telling was the fact that, last Tuesday, when $SPX was up 8 and making new all-time highs, breadth was NEGATIVE! These divergences should not be ignored.

Equity-only put-call ratios have rolled over to sell signals. Market breadth indicators are on sell signals as well.

Volatility indices ($VIX and $VXO) have moved higher, but not overly so. A close above this weeks highs, and then above the March highs at 15.40 would accomplish that bearish task.

This market has routinely ignored technical divergences and other negative items for quite some time, but a breakdown by $SPX would force the bulls to take notice.

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.