Wednesday, March 3, 2010
This morning, our overbought market seemed set to get even frothier, but after a bout of profit-taking , we ended mostly flat. Breadth was still quite positive on the Nasdaq, which also boasted higher volume than the NYSE, where breadth was around even. I don't know what accounts for this difference in the NYSE and Nasdaq volume patterns of late, but it certainly makes the latter look better. Some market players cited the Beige Book for the selloff, while others blamed President Obama and the proposed "Volcker Rule" for bank regulation. I believe we were simply due for a rest; we would have found a reason, no matter what the news. Even with the softer action this afternoon, it is hard not to be impressed by the strength of the action lately. We easily broke through overhead resistance, and the pullbacks have been very mild. I'm amazed at the number of parabolic moves I'm seeing. If there is much worry out there, the action sure doesn't reflect it. With the IWM up 14 out of the past 16 days, you aren't going to find a lot of easy buy points, but this action has the same character as what we saw last year, and it has persisted to a much greater extent than nearly anyone had expected. Bulls seem to have control right now.