The overbought conditions that had existed a couple of weeks ago were largely worked off by a sideways to slightly down stock market, as measured by the Standard & Poors 500 Index ($SPX). It seems that the bears had their chance, but didn't seize it once again. There is strong support in the 1670-1680 area.

Equity-only put-call ratios remain on buy signals. Market breadth has generally been quite weak over the past few weeks. As a result, the breadth indicators have returned to more normal levels from their overbought extremes of a month or so ago.

Volatility indices ($VIX and $VXO) have remained relatively subdued as well. That is bullish for stocks. In summary, unless there is a breakdown by $SPX and some accompanying sell signals, the market can work higher over the near term.

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.