The Trend Still Appears To Be Up

For the third day in a row, the market action was lackluster. It wasn't particularly bad, but it was much less energetic than we have seen recently. The indices were just slightly in the red and so was breadth. We had some strength in biotechnology, retailers, homebuilders and chips, but the weak dollar plays, which include oil, gold, steel, coal and commodities, in general were the laggards.

Although Doug Kass made a big bearish call today, and there were plenty of other folks agreeing with his view, the market still hasn't done anything technically that would support an aggressively bearish posture.

We seem to be a bit extended and haven't consolidated much, but the trend is still up and the dip buyers are still lurking. This rally has been one of the most hated I've ever experienced as many bulls just never fully embraced it and the bears have been decimated. That leaves us with folks rooting again for the market to pull back and wanting to add some long exposure because they are tired of being left behind.

The market will eventually roll over, but it is going to be very stubborn about it, and for now, there isn't anything happening that is that negative. We just have some slow, lackluster trading and a lot of folks who are rooting for a pullback.

In other words, today the US equity markets ended virtually flat on the day, unable to hang on to post-data gains. Consumer stocks did well, but were offset by lower industrial stocks. European markets fell, and Asian equities are likely to open flat today, as Asian ADRs were unchanged during North American trading Wednesday. Nikkei futures are pointing to a down open for Japan, and exporters are likely to be hurt by the firmer yen. Brazil stocks outperformed, helped by reports that Moody's may upgrade it soon. That would put Brazil at investment grade from all three rating agencies. Bovespa should continue to outperform (up 91% in dollar terms YTD) due to strong fundamentals. Markets continue to fret about China, so mainland stocks may come under renewed pressure after having an up day Wednesday.