An optimist would still see the bullishness in the $SPX chart, with the higher highs and the higher lows. A pessimist would see failure to break out over 2790 this week as a major problem. So, one needs to watch resistance at 2790 and support at 2730 as significant levels. The equity-only put-call ratios have remained solidly on buy signals.

As for the breadth oscillators, they just rolled over to sell signals as of last night's close. These oscillators have been fairly accurate of late.

This brings us to volatility, and the next big clue for the market may lie within the volatility complex. First, the $VIX chart is fairly constructive for stocks. But it's the term structure of the $VIX futures that could be a problem. If it inverts, that would be a huge negative signal for the stock market.

In summary, the bulls failed to capitalize on a golden opportunity early this past week when they could not move $SPX above 2790 on a closing basis. So now, we are dealing with a pullback that could turn into something much more nasty. At this point, the edge still goes to the bulls as long as $SPX holds above support at 2730, but a violation of that level would be a sign to take bearish action once again.

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.