Stocks have had a rocky week, but some buy signals are beginning to appear. $SPX broke down through support at 1925 this week, and immediately plunged to 1820, which is also the area of the April lows. That is support for now. If that should give way, then the February lows at 1740 would be the next support area. As for resistance, there is plenty of overhead resistance from 1925 all the way up to 1960 and beyond.

Equity-only put-call ratios are racing higher every day. Thus, they remain on sell signals, although at their current heights, one would have to consider them to be in oversold territory.

Market breadth has been surprising. "Stocks only" breadth has been positive for the last three days, including the huge down day on Wednesday. Even so, both breadth oscillators are still on sell signals, although they are finally approaching buy signals.

Volatility indices finally exploded to the upside. This is long overdue, and frankly I think $VIX should be higher than it is. The trend of $VIX remains higher, though, and that is intermediate-term bearish for stocks.

In summary, the bulls have been wounded, but the massive oversold conditions that were created are now generating some buy signals. These can be powerful buy signals, but as long as the intermediate-term indicators remain on sell signals, the intermediate-term outlook remains bearish.

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.