The stock market just keeps rolling along. There is probably a very good reason why the Dow has been up 22 of the last 25 days -- and other broad market indices have followed suit. The reason is that there is still a significant portion of the investment community who is under-invested (and there may even be some shorts left), from that swift correction we had at the end of February.

$SPX has finally crossed above the 1500 level for the first time in over 6 years, and it appears inevitable that it will challenge its all-time highs. The intraday high is 1552 and the closing high is 1527 -- both set on the same day, March 24th, 2000. By the way, you can tell how volatile the market was back then, by the fact that the high and the close for $SPX were 25 points apart on that day. The support line for $SPX is the trend line connecting the bottoms since March. Ironically, that trend line is very closely following the 20-day moving average. Currently, it's at about 1475. So any correction back to that level would just be normal.



The equity-only put-call ratios continue to plummet, which is bullish. Of course, they are now reaching the lower regions of their charts and -- while we would only consider them bearish if they roll over and begin to trend higher -- that makes them overbought. This past week's action has seen a huge influx of call volume, which is reflected in the fact that the ratios have fallen at an even faster pace.



Market breadth has been perhaps the weakest indicator. Oh, sure, breadth is strong on big up days like yesterday. But, on many of the slower-paced days, we've seen declines outnumber advances, even though the Dow and $SPX are higher. That is usually a sign of negativedivergence, but it hasn't been -- so far -- for this particular market.



Finally, the volatility indices ($VIX and $VXO) have been conducive to a bull market as well. $VIX has crept higher -- toying with the 14 level at one point. However, it hasn't really established an uptrend, something which would be more bearish. In fact, what we may be seeing -- although it's too early to tell for sure -- is a rising $VIX in a rising market. That's what we had back in the 1990's.



In summary, we remain intermediate-term bullish, while acknowledging that short-lived corrections are possible. We have often compared the current market to that of 1995-96. So far, it is forming a very comparable pattern. We all know what happened after that skyrocketing prices. Could it happen again so soon after the bubble of the 1990's? Anything is possible.

Lawrence G. McMillan is the author of two best selling books on options, including Options as a Strategic Investment, recognized as essential resources for any serious option trader's library.