More Rally Ahead?

Click on Chart to Enlarge

On a short-term basis the market is overbought or very near it. However, my personal feel for things right now is that this rally has further to go. Based off of chart technicals, I think the S&P should test the 1130 level at minimum.

The chart above is from Sentimentrader.com showing that small option traders (DUMB money) are buying as few calls as they have at any other time the last few years other than near the end of the bear market. So they are not bullish for sure. This alone seems to make it a likely case that the market has further upside ahead before pulling back.

Also, I looked at charts of almost every stock in the S&P 500 this past weekend, and I am seeing several attractive bullish patterns, and lots more with strong technical bullish divergence that could still unwind a good bit.

I don't really have any tricks up my sleeve right now to have a great idea of if/when the rally will reverse. As long as the recent S&P low at 1060's holds, then I will assume an intermediate term rally is in effect, and may post a bullish trade if there comes a nice short-term oversold set-up.