Just in case the bears were starting to feel that the market momentum might slow down, we had a good old fashioned late-day buying spree. It felt like someone big jumped in and said "Let's squeeze this sucker!"
The late-day surge put some lipstick on what was starting to look a little ugly. There was nothing really dramatically weak, but there was some troubling action in chips, natural resources and even small banks, which reversed hard. However, the bulls had some good action in homebuilders, which may have been caused in part by reports that John Paulson is now bullish on housing, and for some reason small-caps exhibited unusually strong relative strength.
It is earnings season, so that means we quickly turn our attention to the next batch of reports. The most important is probably QCOM, which is trading down on lowered guidance. AMGN is also down on its numbers due to health care reform costs, and FFIV, CTXS and NFLX are taking hits on their numbers. So far I'm not seeing too much positive earnings action other than SBUX.
We continue to have a very high degree of sell-the-news risk here, but the dip-buyers are staying very active, and that is keeping the selling pressure contained. Tomorrow we won't have the big boost from AAPL, and so far I'm not seeing any fantastic reports, so it will be a more challenging test for the bulls. The battle is heating up, and that should make for better trading - for all you traders, that is.
long AAPL, NFLX