Bulls have been totally dominant again, over the past week (and really since last November). The gap upside breakout over the minor downtrend line on July 12, was once again the beginning of a strong upward move. This was similar to the previous upside breakout gap over a downtrend line, in late April. The $SPX chart is thus strongly bullish and will remain that way until support at 2400 is broken.

Equity-only put-call ratios officially rolled over to buy signals in the past week. =You can see that these buy signals came from relatively low levels on their charts -- meaning that they did not evolve out of deeply oversold conditions.

Market breadth has been fairly strong during this last breakout. As for the breadth oscillators, they are on buy signals, and they are finally trying to edge their way into overbought territory.

Volatility is a "stickier" situation. $VIX is low and that is generally bullish, in that stock prices can continue to rise while volatility remains low. However, volatility indices have gotten so low that they are at historically overbought levels.

In summary, the intermediate-term outlook is bullish as the $SPX chart is strong, and all of the indicators are bullish. We do not have any sell signals at this time. But the overbought condition warns of the very real possibility of a sharp, but short-lived correction.

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.