Things are beginning to deteriorate, somewhat in terms of price, but mostly in terms of our indicators. We've seen this scenario before, though -- most recently in late December, but the market response was subdued and volatility remained low. That combination resulted in a move to higher prices after December, and it could well be that the same is setting up now.

Even with this week's decline, though, $SPX remains in an uptrend. The pullback so far has only tested one support level, and all of the moving averages continue to slope upward. Hence it is a bullish chart.

Equity-only put-call ratios have rolled over to sell signals as well. They are not racing upwards, but they do appear to have bottomed.

Market breadth has been quite poor over the past three weeks, and especially poor since the last all-time $SPX high was touched on March 1. As a result, both breadth oscillators have been on sell signals. They have now reached oversold territory, so buy signals could easily set up if breadth improves.

Finally, we come to the volatility complex, where things remain bullish -- business as usual for this indicator. In summary, we now have the same configuration we had in late December: sell signals from breadth and put-call ratios. But without confirmation from $VIX and especially from $SPX, we would not get too excited about this budding bearishness. In fact, the intermediate-term outlook remains bullish until $SPX breaks support and $VIX climbs above resistance.

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.