As they have for the better part of 10 years, market participants ignored a good report from INTC, and a generally negative reaction to earnings had market players leaning bearish when news out of Europe about progress on the sovereign debt issues caught them by surprise. Just when it looked like that excitement was about to fizzle out, the New York Times reported that a debt ceiling deal was close. Although that news was semi-denied, it helped to keep bid under the market for the remainder of the day.
Overall, we saw good breadth and some strong point gains, but it had the feel of market players being underinvested and short rather than real buying. We saw similar action back in late June when there was a furious move higher as poorly positioned players struggled to keep up with a market that wouldn't pull back --even though everyone agreed it was overbought and that the news flow didn't support the move.
Once again, we have plenty of folks thinking that this market is ready to be hit with a strong 'sell the news' reaction soon on some news like a debt ceiling deal. Technically, that setup makes sense but this market has been extremely perverse and we have a strong tendency to overshoot to the upside. Of course, a news headline can change things quickly. Let's see which headlines hit tonight.