"The FOMC inspired rally has continued and a new trading range may be setting up," says Larry McMillan in his Daily Strategist, an options trading service.

The technician explains, "With continued strength, the breakout of the trading range is starting to have a more valid feel to it – and a new trading range bordered by 1480/1490 on the downside to 1550 on the upside may now be setting up."

Market breadth, he notes, is overbought and he considers this bullish – especially given the fact that we have just seen a 90% up volume day. He suggests, "As we have often seen – a market that is overbought and that adds to the overbought condition (on price improvement) – has positive price momentum in its favor."

He also points out that the $VIX has continued to trend lower, which he considers positive. Further, he adds, the Equity-Only put-call ratios remain bullish as well. Therefore, he states, "Our technical indicators are overwhelmingly bullish; and sector performance is extremely positive based on the Financial and Energy sectors."

"Several factors came together this week to produce a very nasty decline," notes technical expert Larry McMillan. In his Options Strategist Hotline, the advisor notes, "The over-riding technical factor, in my opinion, was the breaking of the 1535 level on S&P 500."

For the technically-savvy he points out, "When both the Dow and $SPX broke out to new all-time highs (was it really only two short weeks ago?), $SPX left behind a well-defined support level at 1535-1540."

This past Tuesday, he observes, "When the market started its sharp decline, it was clearly noticeable that selling accelerated greatly as soon as the 1535 level was penetrated on the downside."

In his assessment, this suggests a formation known as a "false upside breakout?" And he adds, While this false breakout is bad enough, there is another rule
of thumb associated with such things."

He explains, "It is said that if a stock, or an index in this case, stages a false breakout in one direction and then comes back to break out in the opposite direction, then the second breakout is the 'true' one." That, he says, is what has just happened with $SPX.

According to options trading expert Larry McMillan, "Three favorable economic data releases in as many days has changed the fundamental and also technical picture from bearish to moderately bullish in as many days."

In his The Options Strategist trading newsletter he explains, "Resistance at 1515 to 1520 for the S&P 500 was overcome on a closing basis; and new all-time intra-day highs (1552) for the index are once again in sight as a result: though the previous recent high around the 1540 level now represents near-term resistance which will have to be overcome."

The advisor notes that sector leadership has transitioned from "being on the verge of breaking down to staging an upside breakout of sorts/" He states, "A sizeable rally in the energy futures inspired a rally to new highs in the energy sector while the financial sector was able to stage a rally to just shy of new all-time highs, despite a sizeable increase in the ten-Year note yield."