The more you think a correction is forthcoming, the higher the market edges higher. The reality is that stocks have not had a noticeable correction since this rally started. This makes us uneasy, but fighting the upward trend may be ill-advised, as the bias is clearly bullish.

Simply take a look at the new-high/new-low (NHNL) ratio, a measure of the number of stocks touching a new 52-week high versus the number of stocks that have declined to new 52-week lows. The theory is that, in a bullish market, investors quickly bid stocks up, and you see a rising NHNL ratio. When investors get nervous, fewer new highs are made, and the NHNL ratio will tend to decline, thereby giving you a warning. At the other end of the spectrum, bear markets have more new lows than they have new highs. Watch the sentiment to see how the market is feeling.

The trend of the NYSE NHNL had been edging higher, with 72 of the last 76 sessions bullish. The near-term trend is positive.

In the technology area, investor sentiment on the NASDAQ has been mixed since May 6, but the past 34 straight sessions have been bullish.

Markets continue to trade with an upward bias, with the S&P 500 coming within four points of testing 1,200 on Monday. The fact is that, despite the extended rally and overbought technical condition, stocks are holding up well. In spite of what I feel is the absence of a correction and hence increased risk, it's hard to fight the trend.

More impressive is that all of the four major stock indices I regularly follow are now showing a "golden cross" in which the 50-day moving average (MA) is above the 200-day MA. This is a bullish move on the charts. Indications point to additional upward moves going forward.

The near-term technical picture remains bullish. Watch the overbought condition. Investor sentiment continues to be bullish on the NYSE and recently towards the NASDAQ.

So far it looks like an up year for stocks especially in the small-cap area, which traditionally has outperformed following a recession. The Russell 2000 is up over 13% and is leading the pack.

Overseas in China, the Shanghai Composite Index (SCI) has been strong, and it is holding above its key 3,000-point level. On the chart, the index gapped higher, and it is above its 200-day MA of 2,921 as well as its 20-day and 50-day MAs, which is bullish. The SCI broke higher out of its previous sideways channel between 2,575 and 2,700. Watch to see if the SCI can hold at or near 3,000. After being down close to 30% earlier in the year, the SCI has staged a nice rally and is down only 7.72% at this juncture. The Moving Average Convergence-Divergence is bullish and the Relative Strength is strong, so there could be additional gains in the near term.

My advice is to ride the wave, but take some profits along the way. Markets don't go up forever without healthy adjustments.