The market is in a stair-step pattern lower. This is a relatively orderly decline, compared to the "smashes," if not "crashes," of Feb 2018, Oct 2018, Dec 2018 and March 2020. But the bears are in charge now that the 3280 level has been broken.
Below here, there might be support at 3150 and then at the still-rising 200-day moving average, at 3100. The 3310-3330 area and then 3425 above are the important resistance levels at this time. Equity-only put-call ratios (Figures 2 and 3) remain solidly on sell signals, at they continue to rise out of massive, multi-year overbought conditions that had existed at the beginning of September.
Market breadth has deteriorated badly in the last week, and both breadth oscillators are not only remaining on the sell signals that were generated on September 3rd, but they are now in deeply oversold territory.
Volatility indicators remain in the bullish camp for stocks, under the strict interpretation of their statistical measures. However, the distortion in the volatility space being created by the "volatility bubble" in $SPX November and, now December too, option prices has distorted things enough that a strict interpretation may be missing the point.
In summary, with $SPX having broken the support at 3280, its chart is a negative one with a pattern of lower highs and lower lows. This is accompanied by confirmed sell signals in many areas.
This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.