Stocks stumbled into year end, with a couple of down days, the second of which was downright nasty. But was this just illiquid, year-end manipulation (as the bulls suggest) or is it something more serious? It's a little early to tell at this point, but if things don't improve quickly, then the bears have a chance to engineer a correction.

The Standard & Poors 500 Index ($SPX) fell below support at year-end. That support had been at the 2075-2080 level. It is still above its 20-day moving average, though, so the chart hasn't turned bearish yet. A close below 2050 would be bearish.

Equity-only put-call ratios have stubbornly remained on sell signals all through the rally from the December lows.

Market breadth was quite poor over the last two days, especially in "stocks only" terms. Hence, both breadth oscillators have rolled over to sell signals.

Volatility indices began to rise on Monday, and that rise accelerated on Tuesday, eventually exploding on Wednesday. When $VIX rose above 15, that was enough to put up warning flags. Now it is in a full-fledged rising pattern, and when volatility is increasing, that is bad for stocks.

In summary, we now have sell signals from breadth, put-call ratios, and $VIX. However, the chart of $SPX is clinging to a bullish posture by remaining above its 20-day moving average. We have often stated that the price of $SPX is the most important technical indicator. So until the $SPX chart breaks down, the bulls can still cling to control.

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.