Market bulls keep upside pressure on

By Lawrence G. McMillan

Stock market bulls are keeping the upside pressure on, forcing short covering and other unwanted maneuvers from the bears’ point of view.

While overbought conditions are beginning to build up again, there aren’t many clear-cut sell signals. The last time that overbought conditions were somewhat extreme was just over two weeks ago, but all that did was see the market, as measured by the Standard & Poor’s 500 Index SPX -0.15%  , go sideways to slightly down, which was enough to alleviate some of the more extreme overbought conditions.

Now the S&P 500 and the Dow Jones Industrial Average are making new highs again.

The S&P has support in the 1,670-1,675 area, which is where it made daily lows several times in July. The 20-day moving average has risen above 1,680 now, and it is climbing more each day. The first correction — whenever it occurs — usually is limited to a penetration of the 20-day moving average, but not much more. That makes the 1,670 level even more important. If the 1,670 level were broken, lower support is at 1,650 and then below that, at 1,625-1,630 would be called into question.

Read the entire article at MarketWatch.