By Lawrence G. McMillan

Stocks have continued to move higher across all of the major averages. As might be expected after an advance of this magnitude and length, overbought conditions continue to abound.

One of the foremost things to consider, though, is that the chart of $SPX remains bullish. It continues to trend higher, with all moving averages in sync. The first major support area is at 2300.

Both equity-only put-call ratios continue to decline and thus remain on buy signals.

Market breadth has not been great on a daily basis. The rally has not been kind to all stocks, but there is a lot of rotation, and not all stocks are being lifted by the expectations for tax and regulatory relief that this rally seems to be based on. Even so, the breadth oscillators remain on buy signals.

Volatility continues to remain low, and thus is not an impediment to higher stock prices. For $VIX to be problematic, it would have to begin to establish an uptrend.

In summary, we may soon see sell signals from some overbought indicators. But we've seen that before, and it wasn't enough to stop the rally. We would need to see $SPX break support and $VIX break out over resistance before we would abandon our current intermediate-term bullish outlook.

This Market Commentary is an abbreviated version of the commentary featured in The Option Strategist Newsletter.