The stock market had a very favorable reaction to the French election. From a technical analysis standpoint, the move also brought in buyers, since $SPX broke upwards out of the pennant that had formed on its chart. But $SPX has not made new all-time highs, despite many of the small-cap indices doing so. A cynic might say that $SPX is still in a trading range between 2322 and 2401 until proven otherwise.

Equity-only put-call ratios have been falling for the last week and a half and are thus on buy signals now. However, these buy signals are not exactly coming from a deeply oversold position -- which would be a stronger signal, usually. In any case, they are on buy signals.

Market breadth has been strong enough to justify buy signals in both breadth oscillators. The "Trump market" has been denoted by mediocre breadth, ever since it took off in November. There can't be that much rotation, so I would have to say that it's become a market where there is less correlation between the broad market ($SPX) and the individual stocks. That is not a problem or a negative connotation; in fact, the stock market was that way for decades until the hedge funds got into the "we all do the same thing at the same time" philosophy in the last 12 years or so.

The volatility complex has returned to a benign state after its brief fling with euphoria over a potential French election disaster. $VIX gapped down sharply on Monday, with $VXST losing 42% that day and $VIX losing 26%. $VIX traded at its lowest price (intraday) since early 2007 (see Figure 4). In general, a low $VIX this is a good thing for stocks, for as long as $VIX is not trending upwards stocks can rise. But these extremely low levels can be a short-term problem for stocks.

In summary, we await confirmation of an upside breakout by $SPX before turning intermediate-term bullish. In the meantime, there may be viable opportunities in the volatility derivatives to keep one occupied.

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.