Rather heavy selling over the past six days (with the exception of last Friday) has resulted in a deeply oversold condition. That should produce a short-term rally, but after that the picture is far less rosy.

The bigger picture in $SPX shows two converging trendlines: a rising trendline connecting the October and November lows, and the declining trendline connecting several tops since July (which is near the 200-day moving average a major provider or resistance to date). Both are significant.

Both equity-only put-call ratios are now rising, which places them on sell signals.

Market breadth has been heavily negative during this period, as well. That has resulted in breadth generating sell signals.

Volatility indices ($VIX and $VXO) have been registering a short-term bullish divergence by generally declining even though $SPX was falling.

For now, we expect a short-term rally because of the oversold conditions. Depending on how that unfolds, we may see some longer-term bearish setups near year-end. Meanwhile, all moves will be somewhat subdued unless and until $SPX breaks out of the converging trendlines on its chart.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, and also publishes several option trading newsletters.