Despite the media euphoria over recent rally days, the $SPX chart remains short-term negative because of the downtrend lines. So far, this is showing no signs of being more than a short-term correction, though. It would take a breakdown through major support at 2400 in order to turn the $SPX chart truly bearish.

Equity-only put-call ratios continue to move sharply higher on their charts. There has been a great deal of put buying since this corrective phase began in early August. These ratios will remain on sell signals as long as they continue to rise.

Market breadth oscillators have generated new buy signals this week. It's just that the breadth oscillators have been such wishy-washy indicators for quite some time now, that one cannot be certain they have mended their ways.

The volatility complex has returned to its boring, low-level state. With $VIX below 13, it has bullish ramifications. There is still one potentially negative aspect of the $VIX chart and that is that there is a budding uptrend on the chart.

In summary, there are mixed signals -- from the strong negativity of the put-call ratios, to the resuming bullishness of the volatility indicators -- but the chart of $SPX remains most important. As long as it's in this downtrend, it will remain in "correction mode."

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.