Is the market beginning to look a little tired?  Perhaps, but there is no hard evidence of any more serious than that. $SPX made new 6-year highs this week, and the small cap indices -- $SML, $RUT, and $VLE -- all made new all-time highs.  Even though $SPX closed on the downside the last two days, it managed to make new 6-year highs each day, before falling later in the day.  But the lack of follow-through may indicate that another brief correction is at hand.

From a longer-term perspective, $SPX is positive as long as it continues to rise within its established trend.  At the current time the top of the channel is about 1430 and the bottom near 1390.  We would expect $SPX to decline if either level is exceeded: if 1430 is touched, $SPX would be so overbought that a decline would be in order, while if 1390 is violated on the downside, it would indicate a more serious break of the established trend.  Otherwise, $SPX is bullish as long as it remains with the uptrending channel.
 

The equity-only put-call ratios continue to remain very bullish. These are intermediate-term indicators and they have not wavered since the last buy signal, back in August.  Both the standard and the weighted ratios made new lows this week, indicating that the bullish trend is still strongly in force.  If one were looking for something negative here, about the only thing he could find is that these ratios are getting rather low on their charts, but that really isn't important, as long as they continue to decline.

Market breadth (advances minus declines) has been very strong of late. If there are couple more days of negative breadth soon, breadth could roll over to sell signals again, but remember that these are confirming indicators, not leading ones, so unless some other indicators were to join them in a sell signal, we wouldn't act on it.

The volatility indices ($VIX and $VXO) had remained subdued until today, when they spiked upward -- especially near the close. Technically, this is the third straight day of rising $VIX prices, although the first two were so tiny (10 cents, combined) that they hardly count. In any case, as you can see from the $VIX chart, this is the highest close in two months.  If $VIX closes above 12.70, we'd grade it as a sell signal.

In any case, more caution is warranted now than at any time in the last few months.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.