The two indicators we use to call for a short-term rally in stocks are now neutral. Any further progress this week is likely to have them pointing to a short-term decline. Take a look at this chart of the McClellan Oscillator plotted alongside its Bollinger Bands.
Here's how the S&P 500 traded after the McClellan Oscillator popped above its upper Bollinger Band last September and November.
The VIX dropped rapidly following the three previous buy signals this year. But it never reached its lower Bollinger Band before reversing and heading higher again. A rising VIX typically coincides with a falling stock market.
Any additional gains in the market this week are likely to push the VIX down toward the 15 level. That move would match the action following previous signals. It would likely mark at least a short-term bottom for the Volatility Index and a short-term top for stock prices.