The stock market has taken a real beating in the new year. Massive oversold conditions have arisen, and a sharp, but short-lived rally is possible at any time. The larger picture, though, is an intermediate-term bearish one.

$SPX has been down-trending since early December, when the first pattern of lower highs was established. The current pattern of lower highs and lower lows remains intact, and that is bearish.

Equity-only put-call ratios are both racing higher, as one might expect, so both remain on sell signals now (although both have flirted with buy signals in recent days).

Market breadth has been a disaster, as one might expect. Both breadth oscillators remain on sell signals and both are in oversold territory.

The volatility complex is important and interesting. $VIX is now trending higher, and that is bearish.

In summary, there is a lot going on. Major oversold conditions all over the place. One should not buy merely because the market is oversold; confirmed buy signals must be generated first. Furthermore, an oversold rally is not lasting. The only thing that is really going to change the tenor of this market from its current bearishness is a breakout above the downtrend line on the $SPX chart. At this time, that would take a rally above 2080, and frankly I just don't see that being a realistic possibility right now.

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.