The indices stumbled in the final hour of trading and ended up finishing around flat, but there was some interesting, very interesting trading under the surface. Breadth was slightly positive, and we had some strength in commodities, solar energy, chips and gold, while oil, energy and financials lagged.
Some of the high-beta big-cap names that stumbled last Thursday and bounced back a bit on Friday rolled back over again today. Names like PCLN, CRM, WMW, FFIV and NTAP are losing or have lost their momentum. That is not a promising development.
On the other hand, there was some very aggressive momentum trading of solar energy and small-cap China stocks today. It was interesting to see the hot money move from "glamour" names to some low-quality secondary names. In the world of trading, the key is to stick with what is working, and what was working was names that won't ever be considered blue chip.
With the indices churning, more weakness in local leadership and high levels of speculation in junk stocks, the bears can argue that we are a bit late in the run. Consider also that according to Telechart, 86% of stocks are above their 40-day moving average. That is above where we topped out in April and is an area where further upside always becomes more challenging.
The major indices still haven't done anything wrong. There are some warning signs we need to monitor, but until the S&P500 slips back under 1150, I'm not going to be too bearish.