Today's move saw $SPX blow right through the resistance at 1260 and also through the 200-day moving average at 1272. Those are both significant levels to have overcome. The market may have to spend some time around the 200-day moving average, as it often does when it passes through that level, but the next higher targets of 1310 and then the yearly highs at 1350-1370 should be within range fairly soon.

The last few days' action has pushed the Equity-Only put-call ratios onto confirmed buy signals.

Market breadth indicators have been on buy signals for a couple of weeks, but have recently been overbought. However, it is normal for breadth indicators to be overbought when the market is breaking out to the upside.

Volatility indices ($VIX and $VXO) were slow to confirm the upside breakout. With today's strong push upward by $SPX, $VIX has finally broken down to new relative lows.

In summary, the pieces are in place for an extension of this rally.

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.