The broader averages were up once again Tuesday setting yearly highs. Just to give you an idea how strong the market has been, the S&P 500 is up over 7% in roughly a month and the Nasdaq is showing about a 10% gain over the same time period. The question continues to be, how high is high? The answer is no one knows! Until it shows us a precursor to a slowdown, let's take it for a ride.

One of the leaders in this rally has been the retailers and Cost Plus Inc. (CPWM) chart has some interesting qualities. It started its rally late October, ran into resistance at $19 and has since gone sideways. The action has mapped out a Cup and Handle and is now sitting on support. The volume has been strong on the up days with decreasing volume on the down days. If Wednesday's action takes out the highs from Tuesday, it would appear that the next leg up will begin.

Cost Plus Inc. (CPWM)

The market is overbought and a correction is due. Unfortunately, no one knows when it will start. It is imperative that stops are used to protect your profits and principal.

Tom Incorvia is a swing trader with 18 years of experience in the financial markets.  E-mail him at tincorvia@gmail.com.