Take Profits?

We have had a very good run over the last six days, and what has been even more impressive is the fact that there have been some unusually strong pockets of momentum. The action in many of the strongest names has become downright frothy, but market players have been increasingly confident lately and eager to chase the hot names.

The somewhat better-than-expected weekly unemployment numbers this morning provided the bulls with another reason to keep on buying. We still have enough unemployment claims being filed to keep the unemployment rate moving higher, but the market has had very low expectations lately. Nonetheless, we have become overbought enough that it didn't take much for some profit taking to kick in.

We hit the highs of the day at the open and then meandered about until the news hit that DB may need to raise a substantial amount of capital. We fought back from that dip late in the day and managed a pretty good close. Breadth was solidly positive and the indices in the green, however there were quite a few toppy looking patterns in some recent winners, including CRM and CROX.

Technically, the major indices were all stopped before they could make a run at their 200-day simple moving averages. We are in the higher end of a trading range and have plenty of support to go along with the 200-day moving average resistance.