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Although equities continue to march marginally higher, it’s important to remember that the market is always trying to fool investors. I believe what we’re seeing here is that there are just too many traders who are short, or bearish, and the market continues to climb the wall of worry as those shorts get squeezed.

My indicators are back to bullish again, which tells me that the market continues to be pretty strong, but keep in mind that this strength might only last over the next two weeks or so. Still, that means there’s time to capitalize on short-term bullishness with a call option.

Buy to open the Baxter International (BAX) Jul 45 Calls (BAX 160715C00045000) at $0.60 or lower.

After entry, take profits if BAX hits $44.30 or the option price hits $1.20. Exit if BAX closes below $41.70.

The S&P 500 Volatility Index (VIX) is not indicating any kind of threat of a major decline at the moment. But I don’t believe we’ll test all-time highs either. In my view, we are much more likely to simply limp along.

As far as my overall market outlook, April is typically a bullish month, and I think it will probably continue to be. However, the yellow caution light will likely start flashing in May. Eventually, these markets are going to correct again, and it could be more severe than we think. But I think the thing to keep watching is the VIX. If it starts to move up a few points, then we can start to get more bearish.

Shifting our focus for a moment, I’m not a real big fan of the real estate sector right now, as there’s still a lot of excessive borrowing out there. There are still a significant number of low-down-payment loans being made, so we’re kind of hanging ourselves out again like we did back in 2006 and 2007.

Financial stocks are showing better earnings than were expected, but I don’t believe they’re going to move appreciably higher or lower by much at this point in time. I don’t have any downside plays here because I think financial stocks are valued quite low right now. In fact, if I were going to take a purely speculative position in the financial stocks, I would probably go long.

Another reason, of course, is that there is a lot of pressure on the Federal Reserve to raise rates and, eventually, it probably will, which would be a boon for the financials. However, it’s crucial that we keep an eye on the Fed, as it is just soft-pedaling right now. It’s not accelerating or increasing rates, so the key is to try to determine what its next move will be. A rate cut would be probably the only positive thing that could sway markets — but I don’t think they will do that just yet.

Many industrialized nations around the globe are moving toward negative rates, which is terrible, and it’s not going to help the situation at all. After all, there wouldn’t be much of an incentive to keep money in the bank if it costs you money to do so. Now, banks in some of these nations are limiting how much cash a person can withdraw at any one point in time. It’s all part of a push to eventually eliminate cash as a means of exchange and move in a new digital direction. And then, of course, negative interest rates can be implemented much more easily.

Despite this somewhat frightening economic landscape, I am recommending the call options in BAX since the VIX is not pointing to an imminent correction, so continue to ride with the bulls while keeping some puts in the portfolio for protection.

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