At least one cannot say the market is boring, as might have been said a month ago. The daily ranges are still large, with both buy and sell programs springing up out of nowhere. The battle between the bulls and the bears seems to have settled in now, and there is a real question whether or not the rally can continue or whether it will have to retest the lows.

First, consider the $SPX chart. It is still in a bearish state. At this point, $SPX has developed a resistance area roughly in the 2750 range. If it can close above there, that would be a bullish development. Conversely, continued failures to close above there make the probabilities of a retest of the lows more likely.

Equity-only put-call ratios continue to race upwards, as put buying is heavy. Thus, they remain on sell signals.

Market breadth has weakened again, and both breadth oscillators remain mired in the middle of their range.

Volatility indices continue to play a major role in the marketplace. $VIX is still operating on recent short-term buy signals. The $VIX chart itself, though, retains some semblance of bearishness because it is still in an uptrend. If $VIX closes below 17, that would break the uptrend and would be a bullish sign for stocks.

In summary, the market is at a crucial point right now. If $SPX can close above 2750 and $VIX can close below 17, that would be an all-clear sign for the upside, in my opinion. But the longer the market goes without achieving those levels, the greater the probability that there will be a retest of the lows.

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.