The bullish trend of $SPX remains intact. Having said that, the $SPX chart is extended (overbought), as are many other indicators. $SPX is nearly 60 points above its rising 20-day moving average. Hence a fairly sharp pullback of 60 or 70 points wouldn't change the trend, but it might be a bit shocking to the bulls.
The first sell signal is the equity-only put-call ratio instead. Both ratios are now on sell signals, according to the computer analysis programs, and both are apparent to the naked eye as well.
Market breadth has not been great, as declines have outnumbered advances on each of the last four trading days. Then, with Friday's selling, the breadth oscillators have rolled over to sell signals.
Volatility remains subdued, though, and while that might be considered to be another overbought condition, stocks have always shown that they can rise when $VIX is drifting at low levels. Specifically, we continue to feel that if $VIX closes above 16, that would be a sell signal for stocks.
In summary, it seems as if the market is slowing down, but the indicators are still overwhelmingly bullish, as the only sell signals right now are the put-call ratios and breadth. Thus, it is important to wait for $SPX and $VIX to confirm before attempting to take a strong bearish position.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.