A Bullish Week

The bulls did a nice job today of building on Thursday's strength. Not only was breadth quite good, but volume was heavy. Small caps led the charge today, but an amazing recovery by AMZN, after being pounded last night, added some vigor to the Nasdaq. The S&P500 managed to break through the 1100 level, as I anticipated, and even managed to hold above it at the close.

Overall, it was an impressive week for the bulls, who were on the ropes last Friday and looked ready to give it up again on Wednesday. What we ended up with was a trap for the bears, who were caught leaning the wrong way as good news from Europe hit several times overnight. Too many bulls were underinvested and had to chase to add some exposure and, of course, the bears were forced to cover some shorts.

So now what? We still have hundreds of earnings reports to come, but most of the major market movers are out of the way. The interesting thing about earnings has been that we had some very aggressive sell-the-news action, but then, this past week, those dips on the earnings news turned out to be pretty good buying opportunities, the action in AMZN today being the best example.

Technically, the S&P500 managed the 1100 break, but many continue to believe that it is going to be very difficult to take out the next key level around 1113. Interestingly, the IWM, with its outperformance today, looks much better technically than the senior indices. It is above its 50- and 200-day simple moving averages and has cut through the downtrend line that connects the April and June highs. If it continues to hold above the 50-day simple moving average, it is going to look pretty good.

The bulls definitely made some progress this week and are in good shape to build on it. A little backing and filling at this point wouldn't hurt at all, but we saw some signs today that the dip buyers are out there and are providing some underlying support. There are a lot of market players with too much cash on the books, and they have the potential to keep us running.