While staying cautious, traders need to remember that there is nothing more bullish than rising prices.

When prices are trending higher, they can repeatedly reach new all-time highs. Higher highs are, in fact, the definition of an uptrend. This is a reason for bullishness, and it describes the price action of the major market indexes over the past month.

New Highs Are Required For More New Highs
SPDR S&P 500 (NYSE: SPY) added to its gains for the year last week, closing just shy of 2% higher. The S&P 500 closed above 1,600 for the first time.

In 2012, the companies in the index earned $96.82, according to Standard & Poor’s. Based on trailing earnings, the index is trading at a price-to-earnings (P/E) ratio of about 16.7. That’s not cheap, but it is only a little above average. Based on estimated earnings for 2013 of $110.53, the index has a P/E ratio of about 14.6, a little below average.

Fundamentally, new highs in the S&P 500 are supported by the current level of earnings. Technically, the weekly chart is undeniably in an uptrend.

#-ad_banner-#Last week’s price action pushed SPY out of a small consolidation pattern. Momentum is strong, and the trend could continue higher. The pattern suggests a short-term price target of $164 in the next four to six weeks.

Concerns about a decline now are largely based on the argument that prices are due for a correction. That could be true after stocks gained more than 13% since the beginning of the year. But that is not enough of a reason to sell.

Support is now at $155, and a break below that price should raise concerns. Until prices move decisively below support and break below $152, the uptrend is intact and traders should remain long.

Action to Take –>
— Maintain long position in SPY
— Maintain stop-loss at $152
— Set short-term price target at $164

Gold May Have Reached Resistance
SPDR Gold Trust (NYSE: GLD) gained 0.8% last week as it continues recovering from a double-digit drop in April. Now almost 9% above its April lows, GLD is at the resistance level formed when prices gapped down during a dramatic two-day sell-off.

GLD has been rallying for almost three weeks, but it needs to close above $143.43 before the chart turns mildly bullish. A close above that level would lead to a price target of $155, the upper limit of the two-month range GLD traded in before dropping sharply. With the initial upside limited to about 8%, GLD is not particularly appealing.

Until GLD reverses its downtrend, PowerShares DB Gold Short ETN (NYSE: DGZ), an inverse fund that goes up when gold prices fall, remains a buy. The fund fell 0.7% last week but has significant upside potential. A longer-term price target of $14.59 is about 9.3% above Friday’s closing price.

Action to Take –>
— Buy DGZ on pullbacks below $13.20
— Maintain stop-loss at $12.65
— Maintain price target at $14.60

This article originally appeared on ProfitableTrading.com:
Market Outlook: Do NOT Sell Until This Happens

P.S. — StreetAuthority’s Amy Calistri has one objective for readers of Stock of the Month: to provide one quality stock pick each month, with in-depth analysis in plain English that investors can understand. In fact, she just released a special presentation, “How to Beat the Stock Market… In Just 12 Minutes per Month,” which tells you more about her strategy. Go here to learn more.