Today's market action should be filed under the labels "peculiar" or "odd." We certainly had a mix of action, with pockets of red-hot momentum in big-cap technology stocks contrasted by early concerns about the Ireland bailout news of FBI raids on a couple of hedge funds (which weighed on financials). Breadth went from about 2 to 1 negative this morning to flat at the close. The Nasdaq ended with a solid gain while the senior indices took minor losses.
What was most fascinating about the action today was the very strong trading was in key names such as NFLX, FFIV, AAPL, CRM, CSTR, and so on. The buyers chased these stocks up aggressively and were unperturbed about Ireland, insider trading and any other negatives you could throw at them.
Strong pockets of momentum are exactly what you expect to see during holiday trading. Some of these names were a bit too hot and look extended, so the action may broaden out if the upbeat mood continues.
The dip buyers did a nice job today as they battled back from an opening dip and a break below recent lows at mid-day. The action this afternoon felt similar to what we had late on Friday and clearly indicates that there is strong speculative interest and an appetite for stocks, especially the liquid, high-beta tech names.
We had a couple good earnings reports in the technology sector after the close that are helping keep sentiment perky. The bulls are certainly acting like they want to celebrate the short week of trading. Though there are plenty of negatives that we could worry about, it usually is not a good idea to try to short the holiday spirit when it begins to kick in.