It was a very quiet day of trading, but the bulls continue to hold up very well. There was some profit-taking in momentum names today, but strength in oil, biotechnology and retail more than made up for it. Banks and utilities struggled, but the weakness in semiconductors is the biggest negative right now.
Bonds pulled back again as market players are becoming much more sanguine about a "soft patch" in the economy. Two weeks ago, we had a very high level of negativity as concerns about a double-dip recession were bubbling up, but after a few slightly better than expected economic reports, the mood now feels rather positive.
It has been a good market for individual stock-picking lately, and I'm optimistic that will continue. The major indices are all in trading ranges right now. The S&P 500 is slowly inching up to the upper range at the 200-day simple moving average at around 1115 and is slightly overbought, but the buying momentum is persisting and keeping the bears at bay.
It is a bit of a tricky juncture here, as we could use some more consolidation before making an assault on some significant upside resistance, but the bulls keep on chugging along slowly but steadily. Next week the bears are going to be tested, and we'll see if they have any teeth or are just going to end up being fuel for a short squeeze.
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