$SPX exploded to the upside after the Fed's announcement that they were not going to taper, with both new buying and short covering entering into the fray. With $SPX now at new all-time highs, it has positive momentum, but is also extremely overbought. This latter condition will eventually lead to some sell signals, but perhaps not right away.

$SPX should find support at 1710, the previous high, from early August. A close below there would raise the specter of a false breakout.

The equity-only put-call ratios never did pick up on the rally. When both the put-call ratio and the underlying are rising together, that is a sign that hedging is prevalent. In this case, traders were buying puts for protection. Now, both ratios are on buy signals.

Market breadth indicators are bullish, but extremely overbought. With $VIX 14, we judge that as bullish for stocks. In fact, as long as $VIX remains below 15, it is in a bullish state for stocks.

In summary, the bulls are in charge. Even though they have expended a lot of energy to get to this point, it is likely that prices will still move higher before sell signals eventually appear from the overbought indicators.

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.