The stock market continues to climb higher without a meaningful pullback. Even though this is the case, our system is far from being overbought (the condition necessary to trigger a sell signal).

The first chart is of the NASDAQ highs divided by the NASDAQ lows. The bottom of the chart shows the NASDAQ Composite. You can see that even though the NASDAQ is setting new multi-year highs, the highs/lows are quite low. Each new peak in the NASDAQ Composite has generally brought this indicator a little lower. Even though many technicians will suggest that this divergence is signaling a top in the stock market, our research has shown that significant market tops happen with extremes in indicators, not divergences. Therefore, this is a clear sign that the rally still has room to grow.

The S&P 500 is running up against all-time resistance. A double bottom pattern was recently formed in the index and it looks as if the index is consolidating before another push higher. We would not be surprised to see a little pullback here, pushing the index to the climbing 50 day moving average and horizontal support in the 1512 area below.

The Russell 2000 formed a double bottom pattern recently as well. It looks like this index is also consolidating before its next move higher. A fall to the 830 area would not be surprising, before a continued push to new highs.

The indices we follow continue to push higher with little sign of pulling back. Even though our system is far from being overbought now, this can change quickly. A pullback would be helpful here, as it would imply that the long-term uptrend has more room to grow.