The market continues to do a remarkably fine job of frustrating anyone who is concerned about extended or overbought conditions. We aren't seeing any notable profit- taking after a straight-up run, and there is some dip-buying interest on even minor pullbacks.
We didn't have the same level of euphoria as last week but it was another solid day for the bulls, with breadth running about 3000 gainers to 2500 decliners, and precious metals and big-cap momentum names leading again. Financials were weak all day and oil struggled, but it didn't matter.
The market can work off its overbought condition either by pulling back or trading flat for a few days. Since everyone seems very aware that the market needs some sort of rest, that is helping to put a bid under the market and is leading to flat action. The flat action also helps to drive the shorts crazy and gives the bulls the additional benefit of short squeezes.