Even though everyone on CNBC is now confidently bullish, the market strength today caught a lot folks by surprise. News over the weekend and overseas market action was uninspired. Early indications were for a negative open, but a big target increase of Apple by Morgan Stanley and better-than-expected consumer confidence jumped-started things and we moved along strongly until the final-hour volatility set in.
Breadth was very strong and major groups except for precious metals were in the green at the end of the day. Retailers led on the consumer confidence boost, but energy and semiconductors also came on strong. Select small-caps continued to see some wild momentum as traders are still worried about missing out on big moves.
Coming into the day, the textbook play would have been a break of the 875 support on the S&P 500 that triggered stops and then a rally. Instead we never got the shake-out and moved straight up, which turned the potential dip buyers into chasers if they wanted in.
We are right in the middle of the 875 to 925 trading range of the S&P 500, which started at the beginning of the month. We have some positive seasonality and obviously some folks who are having a hard time adding long exposure without paying up.
The corrections in this market continue to be quite shallow and the bulls just keep on coming back. I sure don't want to fight that, but the complacency of some of the bulls is a little troubling -- so many see clear sailing for a while.
Overall the technical action is fine and the easiest mistake to make lately is to sell too early. We shouldn't spend too much trying to fight that.
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