It may not seem like it, but $SPX has been in a wild trading range between 2585 and 2660 since March 23rd. Moreover, the range is constrained between two moving averages: the rising 200-day MA from below, and the declining 20-day MA from above. Hence, a breakout from this range should produce a strong initial move.

From a longer-term perspective, the $SPX chart is still negative. The 20-day moving average and the "modified Bollinger Bands" (mBB) are declining, and there is a distinct downtrend to the chart. Another aspect of the chart that we have previously highlighted is the negative island reversal.

Equity-only put-call ratios are on sell signals. These ratios will have to roll over and begin to trend lower in order for a buy signal to materialize.

Market breadth has been jumping back and forth with the volatile movements by the broad market within the trading range. The net effect is that the "stocks only" breadth oscillator is on a buy signal, and the NYSE-based breadth oscillator is on a sell signal.

Volatility has been rather dull. Currently, $VIX is drifting lower and has now closed below 19 again. That should be positive for stocks.

In summary, the short term seems to have some bullish potential, but $SPX would have to clearly break out over 2660 in order to verify that. The bigger picture is still negative, though, until there is a reversal of the downtrend on the $SPX chart. If you want something simple to watch, it would be the gap at 2750. Unless that's filled, this is still a bearish market.

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.