This week, $SPX did break down a little bit, violating the 2175 level, which had been the bottom of the tight 2175-2195 trading range that had contained prices for most of this month. But the piercing of minor support at 2175 was not significant. However, a breach of the 2160 support area would be more damaging, in my opinion.

The equity-only put-call ratios have been flirting with sell signals for most of the month of August. Now, the weighted ratio has turned bearish after the modest selloff by $SPX this week, but the standard ratio remains on a buy signal for now.

Market breadth has fallen prey to bearish signals as well. The negative breadth of Wednesday this week was enough to generate sell signals from both breadth oscillators.

Volatility indices and derivatives have edged higher this week, but there hasn't been a bearish confirmation in this area. We have been maintaining that as long as $VIX remains below 14, it would not be a problem for stocks.

In summary, we are waiting to see if either $VIX or $SPX will violate resistance/support, respectively. A move above 14 by $VIX would likely also coincide with sell signals from breadth and put-call ratios. If that breakout above 14 occurred, one would be obligated to begin taking a bearish stance. However, we have seen times in the past where put-call ratios, breadth, and volatility lined up in a direction opposite to that of $SPX, and $SPX won out. So the real key to a change of our bullish opinion would be an $SPX breakdown. Lacking that, one might adhere to old adage: never sell a dull market.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and publishes several option trading newsletters.