The major indices were quite chaotic today but managed some good gains. Under the surface, it was stronger than it looked, with breadth running extremely strong. We ended up with about three gainers for every loser, and there were a lot of big "junk off the bottom" movers, particularly in some of the technology names we haven't heard about in a long time.
We closed weak, and there were some intraday reversals in the energy and commodity names that have been leading. There obviously is some underlying speculative action as folks are anxious to kick off the new year on a positive note.
The true test of the character of this market won't come until we have a pullback. So far we've have had some great underlying support on the minor pullbacks. That is probably due to anxiety about underperforming in the first few days of 2009. As that psychology subsides, we will see if there really are value buyers lurking out there.
Earnings season is also coming up soon, and the psychology that develops as reports hit is going to determine the next move in this market. At the moment, we seem to be rather sanguine about the continued bad economic news, but at some point we will really need some improvement in conditions.
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