The Bulls' Test Is Coming

The bulls held up quite nicely today; the sellers and shorts were unable to make headway.

Oils were the laggard today on worries about the OPEC meeting this weekend, but retailers, semiconductors, biotech and pharmaceuticals picked up the slack. After bouncing off key support, we traded back to the highs, and the longs decided to stick with their positions in front of the weekend.

After a four-day rally this week, the bullish excitement has really jumped. There is now a big contingent of folks who are ready to embrace the idea that we are in for bear market rally that will last months. There are even those who are ready to declare the death of the ursine market...

I'm certainly rooting for a good uptrend, but the bulls have yet to be tested yet. We had one pullback today that found support right where it needed to, but Friday afternoons are probably not the time when the bears will look to make their case. If we see a gap up on Monday morning, that is when I expect to see a more severe test.

The big positive we have going for the upside right now is the possibility that we will see a bank bailout plan soon. We rode up this week mostly on news about mark-to-market, banks making money outside of their loan portfolios and people being tired of being too negative. The doom and gloom was knee-deep on Monday and we've now boomeranged back in the other direction. Expect some choppiness next week.