With stock market bulls all in, could high soon follow?

* Cycle status is based on S&P 500.

”Buy on weakness.” That’s the strategy for bull trends. On the Major Cycle that method has worked since March 2009. And on the Intermediate since November 16, 2012 and on the short-term trend since February 26, 2013. Within the long-term trend there were intermediate buying opportunities, or price lows, in July 2010, October 2011, June 2012, and November 2012. The recent intermediate trend on the heel of its November bottom offered two short-term buying opportunities, one in December and another in February.

For those prescient enough to recognize strategic lows, the uptrend since March 2009 has been rewarding. And while price is the final arbiter, or should be, of market exits and entries, all astute investors know that the internal mechanics of the market are a good way to measure its overall health. Once a market high is reached, only the unwary will have the luxury of nonchalance as prices begin not just another presumptive pull back and buying opportunity, but the first leg down of a new bear trend.

Market Overview – What We Know:

• All major indexes rallied to best levels since March 2009. S&P 500, Dow 30, and Value Line indexes hit new all-time closing highs last week. Only NASDAQ Composite has yet to better all-time high (5132.52) hit in March 2000.
• All indexes are “Overbought” on Minor, Intermediate, and Major Cycles.
• Market volume increased about 2% on week.
• S&P 500 weakness below lower edge of 10-Day Price Channel (1551.37 through Monday) would suggest end to short-term advance in effect since February 26. Intermediate trend remains positive until lower edge of 10-Week Price Channel (1505.64 through April 19).
• Daily MAAD rallied to new short to intermediate-term high last Thursday and then backed off slightly Friday. Weekly MAAD moved to its best level since March 2009 last week. Both cycles remain marginally “Overbought.”
• Daily CPFL rallied to new short to intermediate high last Friday and to best level since mid-December 2011, but is nowhere near major resistance high made week of February 25, 2011.

The only way we know how to measure the well-being of the market and the intensity of an ongoing rally is to monitor a set of indicators with a proven track record. Momentum measures the upward motion of a bull trend and whether that price move has an upward, or downward, impetus. If Momentum, depending on the cycle, makes new highs with pricing, so much the better for the overall tone of the market. If, however, Momentum begins to demonstrate signs of failure, despite new highs in the market, a yellow flag of caution is evident. That has been the case with this market since April 2010 on the Major Cycle and since February 2012 on the Intermediate Cycle. Short-term Momentum peaked back on March 14, and has also yet to make new highs.