As it stands now, $SPX is in a trading range between those extremes of the past week: 2785 to 2860. Indicators have become mixed during this pullback, so probably the best indicator will be price action itself. That is, follow a breakout above 2860 or a breakdown below 2785 as the impetus for the next directional move.
Equity-only put-call ratios are on sell signals and are rising almost daily. Put volume has been heavy for the last couple of weeks, and so the ratios bottomed and have been heading higher. As long as they are in uptrends, they will remain on sell signals.
Market breadth has been jumping back and forth between strongly negative and strong positive days. As a result, the breadth oscillators have given five sell signals in the last three weeks, all of which have been canceled out. This is annoying, at best. For the time being, we are not going to be acting on these breadth signals unless they are confirmed by another indicator.
Volatility is the most bullish of the indicators, as it has probed above 17 a few times, but has not closed above 17 since January. As long as $VIX stays at these low levels, stocks can continue to rise. But if $VIX begins to establish an uptrend, that would be a large negative for stocks.
Overall, the pullback over the past week was larger than one might have expected for a retest of the breakout level. Normally, such a pullback would only retrace to 2820, or perhaps 2800 intraday. But since $SPX has not closed below 2800, the pullback still falls into the "testing the breakout" category. A close below 2785 would be negative. Otherwise, the bulls still have a chance to right the ship and try for the all-time highs once again.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.