The stock market continues to make new all-time highs for most of the major indices, including the Standard and Poors 500 Index ($SPX). The speed of the advance has accelerated in recent days, after minor resistance at $SPX 1600 was overcome. 1600 and 1550 are both strong support levels. There has been enough publicity about the 1600 support level that, if it were broken, some sharp accelerated selling would likely take place.

Equity-only put-call ratios continue to remain on the buy signals that arose about two weeks ago. Market breadth indicators are quite overbought, but they should not be construed as sell signals. Just as an oversold market can decline precipitously, so can an overbought market continue to rise.

The volatility indices ($VIX and $VXO) continue to remain at low levels. As long as $VIX is below 14, that should be conducive to further rising prices in the broad stock market. Despite these overbought conditions, we do not envision much of a pullback in the market unless support at 1600 is taken out. That would change things bearishly, but otherwise we remain intermediate-term 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.