The market's momentum is slowing, but it hasn't necessarily reversed yet. The number of negative breadth days, and their intensity is increasing. The $SPX chart also shows a waning of momentum, but even the first support level at 2070 has not been broken.

Equity-only put-call ratios continue to remain on buy signals at this time. There is an upward "curl" on the extreme right side of both charts. So far, the computer programs that we use to analyze these charts are saying that the "curl" is not yet a sell signal. But it might not take much in the way of accelerated put buying to reverse these indicators over to sell signals.

Both breadth oscillators have been on buy signals, and both registered significant overbought readings. But one more day of strongly negative breadth would roll them over to sell signals.

Volatility indices and derivatives have continued to wander about at low levels. As long as $VIX continues to meander about in its 13 to 16 trading range, stocks should be able to rise. Only if $VIX establishes an uptrend would that be bearish for stocks, so a clear close above 16 would be negative for stocks.

In summary, conditions have deteriorated enough that sell signals are possible. If they occur, and $SPX closes below 2070, and especially if it closes below 2040, short positions would be warranted.

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.