The powerful bull market that began in March 2009 is still in force. Here is why:

After smashing into resistance for three months, the Dow Jones Industrial Average posted a new closing high on Thursday, April 21. This broke a triple-top, but other indices lagged, chiefly the Dow Jones Transportation Average and a score of small-cap, mid-cap and broad-based indices.

The transports fell after making an intraday high at over 5,400 in late March, but that high was not confirmed by the industrial average. The transports then pulled back to their 50-day moving average (blue line), reversed, and yesterday, closed at a new high. This new high is an important Dow Theory signal that the major trend of the stock market is up. In short, we are still in a bull market.

Until yesterday, other major indices had failed to confirm the breakout of the Dow industrials. It was important that these indices, unlike the Dow Jones Industrial Average, which contain only 30 stocks, punch through resistance too. And yesterday, the broad-based Russell 3000, as well as other important indices like the S&P 500 (not shown), also closed at new two-year highs.

Note that each chart contains a lower section RSI (Relative Strength Index). The RSI is an overbought/oversold oscillator. The blue bars represent an overbought market at 80 and oversold at 20. The three indices are just above the middle of the RSI’s range and average in the mid-60s. This means that even at the current level, the stock market could move much higher.

And so the signal has finally been given. There will no doubt be pullbacks and tests as the market continues to climb the wall of worry, but the trend is clear: The bull market has been confirmed.

For one stock to buy now, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.