$SPX broke out on June 29th, and has since added togains, exceeding the early June highs. This creates the bullish pattern of higher highs and higher lows on its chart. $SPX could easily challenge resistance at 1390-1400 in the immediate future.

Equity-only put-call ratios remain on buy signals. Market breadth was very strong again, and now the breadth
indicators are on buy signals but are quite overbought.

Now that the rally is gathering strength, volatility indices ($VIX and $VXO) have fallen fairly sharply. $VIX is hovering near the 17 level. $VIX below 17 is another overbought condition, but as long as it stays there, it's not an immediate problem for the stock market.

In summary, the indicators are bullish, but there are multiple overbought conditions. These overbought conditions are to be expected -- even welcomed -- early in a new bullish move, such as we are experiencing now. So, while there might be a sharp, but short-lived pullback, the intermediate-term trend in solidly bullish.

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.