The action today looked very much what we saw so often last year. We had an anemic oversold bounce yesterday, but the bulls jumped in early today and just kept on pushing us steadily higher all day. There were barely any dips at all; breadth was good and volume heavier.
The S&P 500 didn't quite manage to close over last week's highs, but it did punch through resistance at 1100, and now the next big technical hurdle is 1113, which is the S&P 500's 50-day simple moving average.
Can this market pull off a "V"-shaped bounce to new highs like it did so often last year? We certainly have had a good two-day bounce so far, and we even gained strength today, but we still have a lot of heavy lifting to do to shift the benefit of doubt back to the bears.
After last year, we'd be foolish to not consider the idea that we can pull off another V-bounce, but it is still the exception to the rule. The continued weakness in the big-cap technology names and the lack of any coherent leadership themes make this market feel much different. Maybe we still have some of that liquidity that drove us so much last year, but the news flow is shifting, and the Fed spigot is being turned off. Things feel a bit different, and I believe that will eventually matter.
The last time this market had a failed bounce was way back in June of 2009. We made a lower low in early July, and then GS and INTC ignited a big second-quarter earnings rally. We haven't looked back since, and every dip has been a buying opportunity.
It is always dangerous to say "it is different this time," but until the S&P 500 is back over 1115 or so, that is my contention.....
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