The $SPX chart is unabashedly bullish. It continues to make new highs, remaining above the trailing moving averages and holding above support. Thus the intermediate-term outlook is still bullish.

Equity-only put-call ratios remain bullish. The standard ratio has developed a little "wiggle" over the past few days, but at this point the computer analysis programs are still grading this chart as being on a buy signal.

Market breadth is only mildly bullish. The breadth oscillators have been on buy signals since July 12th, but were never able to register the kind of strong overbought reading that we like to see when $SPX is breaking out to new highs. indicator is still positive.

So now we reach the subject of volatility. It is so low that it has been analyzed, re-analyzed, and cross-analyzed by every commentator and media "expert" on TV, radio, and the internet. What can one say, besides the fact that when $VIX is low, stock prices can continue to rise -- and they certainly have. Clearly $VIX is an overbought state, but as we all know, overbought does not mean "sell."

In summary, all of our indicators continue to be bullish. The overbought condition in volatility warns of a sharp, but likely short-lived correction, and that is probably imminent. But that won't change the intermediate-term picture unless the major support levels of $SPX are taken out.

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.