Indices finished in the green, and breadth was better than 2-to-1 positive, but after hitting highs about an hour after the market opened, it was steady selling all day. We had some strong action in technology due to an upgrade and breakout in Intel and a good move in consumer staples due to good earnings from General Mills, but oil, retail and financials rolled over and finished in the red.
With the end-of-the-quarter window-dressing, Russell index rebalancing, beginning-of-the-month cash inflows and pre-holiday trading, the indices have held up extremely well over the past week or so. On the other hand, we are unable to gain the traction needed to move through key technical resistance at around 930 or so. The bulls are certainly holding up very well, but they are lacking the drive that led to such a quick and vigorous recovery in May and early June.
The question now is whether the bears will have an edge as the various positive factors I listed above come to an end. The bears have been even more inept in pressing when they have an advantage, but we are a bit overbought and are losing some traction.
Tomorrow will prove to be tricky regardless, because we will have both very thin holiday trading and the very important monthly jobs report. No one is expecting great jobs numbers, and this market has shown that it is very willing to overlook poor news, but if traders can't take stocks up, they may start to stand aside and let them fall a bit....
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