"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."