Constant chatter about growing problems in Italy provided a good excuse for some selling, but the bears were unable to do much. Breadth was negative due to underperformance by small-caps, but strength in big-caps as well as precious metals, oil, banks and retailers made up for it.
There were some comments from European leadership that the debt crisis would be under control within two years, which the media claimed was the reason for the afternoon recovery, but I believe it was simply a continuation of buying pressure created because there are too many underinvested bulls struggling to produce some relative performance.
We would probably have been in better shape if we corrected a bit more aggressively and washed out some of the overly optimistic bulls, but it is hard to be too negative when we have the sort of underlying support we saw today. There was some poor action in select small-caps, but there were few signs that market players are worried about recent gains slipping away.
We continue to set up quite well for positive action into the end of the year. Dip buyers are providing support and we are doing a better job of ignoring Europe.