The Return Of Mo

The bulls really came to life today, and although the DJIA was only up about 75 points, the action under the surface was much stronger. Small-caps and big-cap technology led the way on 3-to-1 positive breadth. The inverse correlation with the dollar didn't apply today, and we saw good moves in oil, coal, steel and various commodities. The bears focused on the underperformance of financials, but there just weren't too many negatives to be found. Most interestingly, there wasn't any obvious catalyst for the strength. Some news agencies used the AIG, MIL and OSIP deals as an explanation for the jump, but there really wasn't any obvious factor for such energetic action. Technically we have been struggling right around the 50-day moving average but we cut through that with the gap up open and kept ramping up the rest of the day. The action today is very reminiscent of what we had in 2009. Underinvested bulls had to suddenly scramble to add long exposure and the bears had to run for cover. We even had light volume on the NYSE again as the Naz saw a solid increase. The momentum is back, and while you might come up with some very good argument why you don't trust it to last, you can't be very confident trying to fight it. This market has consistently run over anyone who doubts its ability to bounce. The bounce over the last three weeks has not been as vigorous as what we had seen last year, but the action today made up for it. Once again the bulls have regained the upper hand - it would probably be best to respect that fact.