A break of support at 2580-2600 would likely augur for a retest of the February lows at 2530. A failure there, and the real bear market should unfold -- but perhaps not until early next year (December is normally a bullish month, even in bear markets).
Conversely, if $SPX were to climb above 2820, it would be a very bullish sign.
Equity-only put-call ratios appeared to have generated buy signals a week ago, but those are in jeopardy now. In fact, the standard ratio (Figure 2) has gone on to new highs, so the potential buy signal of last week was canceled. The weighted ratio is on a buy.
Market breadth was terrible this week, and so the breadth oscillators remain on sell signals. They are not oversold yet.
Volatility, on the other hand, continues to be a somewhat confusing subject. There is an uptrend in $VIX (red line in Figure 4), and that is bearish for stocks. That uptrend will be in effect as long as $VIX continues to close above 16 (its recent low).
With the gaps having been closed on the $SPX chart, we are now looking at 2820 and 2600 as the significant levels. A break of either one will be important, but it looks like 2600 is going to be tested now that resistance at 2820 has held in such a strong way.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.