If one looks at the indices, it appears that it was a fairly quiet day, but beneath the surface we had a very unusual mix of action. On the bearish side of the ledger, we saw weakness in some big-cap technology names, such as GOOG and AAPL (more on AAPL in the next post) but strength in AMZN helped offset that. Financials were weak again, particularly GS and some of the money-center banks.
On the bullish side, we had good breadth, with about 3,650 gainers to 2,070 decliners, but the most notable action was some very strong momentum in China-related names and fertilizer stocks. Also, precious metals stayed very strong, even though the dollar strengthened today. The stronger dollar did weigh on oil a bit, but, for the most part, the market shrugged off the greenback rally.
Volume was about average, and the indices didn't move that much, so the positive bullish technical patterns are still in place. This narrow but very strong action in China, fertilizer and a few areas is the sort of speculative excess that feels like topping action, but it is the sort of thing that can persist longer than you would think possible.
There are a few other warning signs, such as the volume patterns and the high levels of bullish sentiment, which we need to watch. But the market still hasn't done anything wrong. The bulls remain in charge, and I don't see any reason to doubt them yet.......