This market just keeps rolling along -- like "Ol' Man River." We have stated several times that it has the appearance of under-invested traders (or shorts) trying to catch up to this juggernaut. That still seems to be the case. It's hard to imagine that the short-lived, but very sharp decline, at the end of February scared so many people out of their longs -- but it apparently did. And to this date, many of them haven't gotten completely back in yet. Of course, about the time they do, the party will be over -- but that's a subject for a later date.

$SPX has now made new 6-plus year highs again. It certainly seems to have its sight set on two targets: 1) the closing high of 1527, and 2) its all-time intraday high of 1552 -- both set on the same day back in 2000. We expect those to be exceeded shortly.

In any case, as long as $SPX remains above its upward sloping trend line, the bullish case is intact. That trend line is currently at 1500 (Figure 1).



The equity-only put-call ratios continue to be bullish (see Figures 2 & 3). They have fallen rather sharply since their precise buy signals at the beginning of April, and now they are near the bottom of their charts. I suppose we could say they're overbought at those levels, but we wouldn't venture beyond that. Just because recent sell signals occurred at about these levels on the put-call chart doesn't mean that the next one will. No, they will only turn bearish if they roll over and begin to trend higher.





Market breadth has been the least bullish indicator -- continuing a pattern that has existed for nearly a year now.
But perhaps the fact that breadth was so weak even though $SPX and the low kept on plodding higher means that an internal correction took place. The negative breadth readings certainly alleviated the overbought conditions that had existed a couple of weeks ago, and perhaps the entire market has likewise been relieved of being overbought. If so, that's a bullish interpretation of the action in breadth.

Finally, the volatility indices ($VIX and $VXO) have edged higher -- nearing the 14 level at times. This is not really bearish. In fact, it may just be a sign that the overall market is going to be more volatile, even while the market is rising. This last happened in the late 1990's.



In summary, we remain bullish. Except for the occasional weak sell signal from breadth, none of our indicators has even remotely seemed bearish. We will respect that and continue to ride the trend.

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.