There is support for $SPX at or just below 1950. In addition, there is support at 1925 (the lows from a couple of weeks ago), and then there is major support at 1900.

The one deteriorating area among our main indicators is the equity-only put-call ratios. Both have started to rise over the past three days, and the weighted ratio is now officially on a sell signal.

Market breadth (advances minus declines) remains bullish. The week's decline brought the breadth indicators lower, but they still remain on buy signals at this time.

Volatility indices ($VXST, $VIX, and $VXV) remain low and misunderstood by most. The average media person reports that low $VIX means traders are complacent and thus warns of the danger for the stock market. In reality, $VIX is quite a bit higher than realized 20-day stock market volatility, so in that sense it is not cheap at all. As long as volatility remains low, stock prices can rally.

In summary, nearly all of the intermediate-term indicators are bullish (save the weighted put-call ratio), so the longer-term outlook is bullish. It remains to be seen whether the overbought conditions will generate any meaningful short-term correction.

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.