It is always nice to see follow-through after a breakout move, and that is exactly what we saw today. It wouldn't have taken much to trigger a little profit-taking after yesterday's surge, and we even saw a weak unemployment report, but housing was strong and investors appeared to shrug off jitters over Europe. The market ended up seeing steady buying all day, and no real dips of which to speak. Volume could have been better, and some of the big-cap technology action was poor, but banks and oil made up for it and retail managed a strong intraday reversal to the upside.
After today's session the major indices are a bit overbought, and there are plenty of extended stocks, so it wouldn't hurt at all if the market consolidated a bit. Because stocks have moved so far, so fast, we are likely to have a good supply of dip buyers to support us. I'm not looking for this market to suddenly collapse unless it's hit with some surprise news.
Speaking of news, we will see the monthly jobs report in the morning. Expectations are fairly high, so I wouldn't be surprised to see it serve as an excuse for some profit-taking, but I don't expect the dip buyers to let it last for very long.
Stocks are within a stone's throw of taking out the highs of the year, hit in early November, and it looks as though we have a very good chance of breaching that level, given the strong momentum.
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