A "stealth" correction has been underway for a couple of weeks. Most people would be mildly surprised to realize that $SPX has fallen more than 60 points from its recent highs near 2110, just over two weeks ago. The decline has been steady and unspectacular, accompanied by few actual sell signals. In other words, it's been a minor correction so far.

$SPX continues to display support at 2040, but a violation of that level would be bearish.

Equity-only put-call ratios have finally rolled over to sell signals. They have been edging higher for a week now, and have been trading more or less sideways for a month. But finally, they are moving higher faster, and that is a sell signal.

Market breadth weakened considerably, so both breadth oscillators are on sell signals, and have been for a couple of days.

The volatility complex is NOT aboard the bearish bandwagon. $VIX has probed up towards the 17 level on each of the last five trading days, but each day it falls back towards 16 by the close of trading. So, $VIX has not broken out to the upside, which would be required for it to turn bearish as a stock indicator.

In summary, $SPX broke down through one support level, and a correction is clearly underway. Somewhat grudgingly, the put-call ratios and the breadth oscillators have rolled over to sell signals in support of that breakdown. Volatility has remained bullish for stocks, though. The next support level at 2040 thus looms large. If it is taken out, a larger correction will unfold.

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.