although a late-day pullback off the highs of the session dampened what were some very strong gains mid-day, it was a positive day for the market. in fact, most of the late selling in the dow jones was in high oil/weak dollar names like aa, xom, cvx and cat, while tech, consumer discretionary and financials held on to most of their gains. ideally, this market would continue to see leadership in those areas, and the thing we need to watch is the action in fixed income. the big question is if the recent jump in rates is indicative of inflationary pressures, or if investors are looking to sell their low yielding assets (treasuries) and looking to move in to higher yields (like equities). the decent economic data and bounce in the greenback seem to suggest the latter.
still, given the whipsaw action we’ve been seeing, it’s far too early to declare victory for the bulls. moreover, even if oil doesn’t come roaring back tomorrow and the market continues to move higher, we aren’t too far from overhead resistance levels… again (for those that believe). as such, simply cooling one's heels and seeing if there is a new theme emerging may be one's best bet at the moment - we may get whipsawed again. trying to identify and stick with leadership lately has been a tricky game to play and has frustrated both bulls and bears alike.