After a severe scare on Monday, which I label the "Emperor has no clothes" decline, the market has responded well, due in large part to some positive earnings report.

Now the problem -- if there is one -- is the resistance from the February and April tops in the 1340-1345 area. Another failure at this level would be quite bearish.

Equity-only put-call ratios have remained bullish, even with the selling that occurred last week.

Breadth has improved with this week's rally, and the breadth indicators are back on buy signals once again.

What has been perhaps the most bullish indicator is the volatility index ($VIX). As long as $VIX is trending lower, that is bullish. Although, with $VIX at these low levels, we would have to classify it as "overbought."

In summary, the indicators are bullish, and so we expect $SPX to make new highs soon. The would mean a clear breakout above 1344.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.