By Lawrence G. McMillan
With the Dow ($DJX) making new all-time highs, and the Standard & Poors 500 Index ($SPX) simultaneously making new post-2007 highs, it certainly seems that higher prices lie ahead.
Both of the equity-only put-call ratios are somewhat distorted. That is because of all the put buying that has been taking place as protection for stock portfolios. At the current time, they are moving lower and thus appear to be back on buy signals.
Market breadth (advances minus declines) has remained positive. Thus, the breadth indicators are on buy signals.
Volatility indices ($VIX and $VXO) have been quite reliable indicators and they are also in a bullish mode, which is fine as long as $VIX remains below 15.
In summary, the market has made new highs, and that alone is enough reason to be bullish. By far the most bullish indicators are the price charts of the major indices. There is nothing wrong with that, per se, but if the other indicators don't improve as prices continue to rise, it would be quite easy for them to turn negative quickly if a stock market correction should develop. I would not be surprised to see a modest stock market correction -- should one get underway -- quickly turn to something more nasty.
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