A week ago, on Thursday, $SPX had broken out strongly to a new all-time high. It followed up with a modestly positive day the next day. On both days, "stocks only" cumulative breadth made new all-time highs as well, confirming the breakout.

However, since then, $SPX has traded in a very small and tight range for four consecutive days. A mere 15-point range has contained all four days' worth of trading. While this is annoying, it doesn't change the fact that the $SPX chart is bullish as long as $SPX continues to close above 2400.

Equity-only put-call ratios have curled slightly upward, but for now they remain bullish, albeit quite overbought.

Market breadth has struggled to remain positive. Yes, the "stocks only" cumulative advance-decline line has made three all-time highs in the last couple of weeks, and that is positive. However, the breadth oscillators have not exhibited the kind of strength that we expect to see with a new breakout. As it stands today, the "stocks only" breadth oscillator has moved back to a buy signal. The NYSE-based oscillator remains on a sell signal (barely).

The volatility complex remains dull and quite low-priced. As we've been repeating ad nauseam, as long as $VIX remains low, stocks can rise. $VIX has gotten SO low, though, that it too is now in an overbought state.

In summary, the $SPX chart remains bullish, and that is the most important thing. The sell signals and extreme overbought conditions from breadth, put-call ratios and certain volatility indices are warning of the potential of a sharp, but short-lived correction, but do not carry longer-term implications at this time.

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.