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Earlier today, we discussed why the new market highs are so bullish.

Technicians like to look at determinants beyond prices to get a read on how a market's internals are behaving. Stephen Suttmeier, a technical research analyst at Merrill Lynch & Co., points out that volume and breadth are just as important as prices in understanding a market.

In a research note to clients this morning, he points out that both have been constructive. The Standard & Poor's 500 Index broke through 1,850 on "solid volume and breadth." According to Suttmeier:

The stocks-only advance-decline (A-D) lines and the more interest-rate sensitive NYSE all-issues and non-stocks A-D lines moved to new highs. The initial breakouts for the A-D lines to new highs in mid February set up the new highs we are seeing in early March.

See the chart for the A-D lines.

Suttmeier suggests that we should expect to see some "backing-and-filling" to work off "overbought momentum." But, he adds that "pullbacks have been shallow" and there seem to be plenty of underinvested managers who are waiting for market dips to put their spare cash to work.

(Barry Ritholtz writes about finance, the economy and the business world for Bloomberg View. Follow him on Twitter @Ritholtz.)

To contact the author on this story:
Barry L Ritholtz at britholtz3@bloomberg.net