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By Lawrence G. McMillan

The stock market's new love affair with the Fed continued this week, and the market really took off after the FOMC meeting on Wednesday. $SPX has now broken out over minor resistance at 2675, having gained a whopping 15% since the market's low close on Christmas eve (a mere 26 trading days ago).

The most important resistance is at 2800-2820. There is support at 2620, and then 2350.

The $SPX chart is the only bearish indicator amongst all of our indicators. Of course, it's the most important one, but when the market finally turns down for a correction, we would expect to see accompanying sell signals from our indicators. Let's review them:

Equity-only put-call ratios remain on buy signals.

Market breadth continues to be spectacular. The breadth oscillators remain on buy signals, and they continue to hover near historic overbought levels. Being that overbought is a good thing, in that it means the advance is extremely broad and strong.

$VIX has been declining, albeit slowly. It closed below 17 yesterday for the first time in two months. A close below 16 would be bullish for stocks. Technically, the trend of $VIX is still upward, for the 200-day Moving Average is still edging slowly higher.

So, everything seems wonderful from the bulls' point of view. There is even quite a bit of continuing bearishness in the media, and by contrary analysis that is bullish, too.

Since there are no sell signals, we remain short-term bullish. Enjoy the ride while it lasts, employing trailing stops and rolling long calls up to higher strikes. Just don't become too relaxed; stay vigilant.

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

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