The stock market finally succumbed, with $SPX breaking down below the long-term support level at 2120 this week. This completes the certification of "bearish" status for the $SPX chart.

Oversold conditions are beginning to appear in great quantity already, even though this decline has been modest so far in terms of $SPX points. It's sort of a slow-motion decline, where the daily losses are steady but not huge. $SPX has declined for eight days in a row, but the total damage is less than 70 $SPX points.

Equity-only put-call ratios are rising sharply now, as heavy put buying and large increases in volatility are driving those indicators at a faster rate than $SPX seems to be falling. Thus they remain solidly on sell signals.

Market breadth has been weak, and thus both breadth oscillators are on sell signals and they are in oversold territory.

Volatility trading has been at the epicenter of this week's bearishness. The CBOE Volatility Indices have risen more sharply then even the put-call ratios, and are increasing at a rate far faster than $SPX is falling. The trend of volatility is rising, and that is a bearish intermediate-term signal for the stock market.

In summary, the intermediate-term outlook is now bearish, with all of our major indicators on intermediate-term sell signals. However, oversold conditions are numerous and are going to be producing buy signals. If enough of these oversold buy signals occur, it would likely indicate an end to the bearish trend. But lest we get ahead of ourselves, let's stick with the confirmed signals and act on new ones only as they occur.

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.