A real battle has developed around the 2420-2440 area of $SPX. That has been the trading range for the entire month of June, but recently there have been some violent moves within the range, including some failed attempts to break out of it. As a result, this is setting up a more important breakout, once $SPX can find its way to clearly break out of the range.

To the casual observer, not much has been happening, but to the trader who is involved daily, there have been some interesting feints
and failures.

This action is like a heavyweight fight, with blockbuster blows being thrown back and forth. But both fighters -- the bulls and the bears -- are still standing and little advantage has been gained. So now there have been two failed upside breakouts and one failed downside breakdown.

A couple of conclusions can be drawn from this action: 1) the bulls no longer have it their way all the time, every day, and 2) support
at 2400 is still strong and keeps the $SPX chart bullish. The equity-only put-call ratios continue to remain on sell signals, as they have since early June.

Market breadth has been the most useless of the indicators. As has been the case since the election in November, daily breadth has just not been impressive -- neither on up days nor on down days. For the record, the breadth oscillators are on sell signals heady into today.

Volatility wasn't too impressed with the market's recent machinations until June 29. $VIX had remained at very low levels, meaning it was giving a big yawn to the bears' attempts to take control. But when $SPX smashed down through support at 2420, and $VIX exploded by trading up to the 15 intraday. However, once the market proved that support at roughly 2400 was holding, the $VIX quickly retreated again and closed with just a modest gain for the day. We continue to view $VIX as being in a benign state for stocks as long as it continues to close below 13, which it has.

In summary, despite some wild action this week, the outlook remains positive because $SPX has held above support at 2400. That clearly is a level where buyers are willing to step in, and as long as that is the case, it must be respected.

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.