After the big day Thursday, the flat action today was exactly what the bulls wanted to see. While there was some mild profit-taking, which helped to prevent stocks from becoming even more technically extended, there was plenty of underlying buying support, which indicates that plenty of folks have been left out recently and are looking for entry points.
Being left out was the market's theme all week. Way too many folks were looking for a sell-the-news reaction to Europe. When a surprise deal was announced late Wednesday, it resulted in panic buying, then the upside move gained momentum.
We were already technically extended and had a slew of folks who were underinvested as they awaited a pullback. The action on Wednesday just created a bigger supply of potential dip buyers hungry to produce gains into the end of the year.
There are plenty of good bearish arguments to be made. It is particularly easy to question whether things have really improved in Europe after this deal, but so many folks have been burned by betting that negative fundamentals will kick in and pressure the market that they are ignoring the negatives even when they are obvious.