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By Lawrence G. McMillan

$SPX has pulled back to the critical support area at 1330-1340. It's one thing to say that an overbought market might have such a correction, but it's quite another to experience one. If $SPX closes below 1330, that would turn the chart negative.

Nearly all the other indicators that we follow have already turned bearish, which makes things much more negative. Breadth indicators registered sell signals.

The equity-only put-call ratios have generated sell signals as well.

Volatility indices ($VIX and $VXO) are very critical to the overall picture. $VIX started rising late last week -- before the broad market topped out, and a rising $VIX is bearish for stocks.

In summary, the bulls have one last chance to rescue things by putting the brakes on this decline -- now. But a close below 1330 would turn the intermediate-term picture bearish.

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