We continue to think that this rally has more room to run on the upside, but that it will eventually give way to the over-riding bear market trendline.

Near-term, there is support at 1970 and then at 1950 (the top of the "W"). It seems that the pullback to 1970 this week was about all that the bears are going to get in the short-term.

Equity-only put-call ratios continue to drop steadily, and that is bullish for stocks.

Market breadth continued to be spectacular through Tuesday of this week. This strong breadth showing is a positive sign for the stock market over the short term.

Volatility indicators are bullish.I would expect $VIX to retreat to the 14-15 area before this rally runs its course.

In summary, all of our indicators are still bullish, and the massive overbought conditions have been relieved to some extent. Hence we expect higher prices in the short term. So stick with the bullish trend for now; just don't get complacent over it.

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.