Monday, November 30, 2009

A Narrow Market

News that the Dubai World debt exposure might only be $26 billion rather than the $60 billion originally reported helped to wake up the market this afternoon. We already have a propensity for strong finishes, so a little well-timed positive news didn't hurt. Financials were the primary beneficiary of the news, and that helped the tone as well.

Even with the positive action in the final hour of trading, it was still a pretty quiet and uneventful day. The best action, other than the late run in financials, was in small-cap China stocks and some lower-priced biotechs. Overall volume was light, but breadth did turn positive late in the day.

Technically we aren't bouncing back with much vigor, but the bears still can't manage to gain any traction. It is a narrower market, and market players seem to be a bit more cautious, but we aren't cracking, and there isn't any aggressive selling.

Tomorrow is Dec. 1, and so far this year, the first day or two of a new month have had a positive bias. However, that doesn't always work. Last year on Dec. 1, the DJIA lost 680 points. This market looks much healthier than it did last year, but it is not quite as energetic as it was this summer......

Wednesday, November 25, 2009

Obviously One Should Never Read Too Much Into Holiday Trading

We had some traditional holiday trading today with some good, but thin, action in a variety of momentum groups like small-cap China, fertilizers and big-cap technology, but it was the weak dollar that really drove the action. The dollar fell sharply, and that drove gold to new highs and propelled oil and commodities.

It is exactly the sort of action you expect to see around the holidays. There is an upbeat mood, and although volume was very light, market players were happy to chase a number of stocks higher.

The important thing to remember about a day like this is that it isn't very significant. Many of the moves will likely be reversed fairly soon, but it makes for good trading. The technical patterns in the major indices are still quite positive, and there aren't any major technical roadblocks in the near term. We have all the same macroeconomic concerns we have had for a long while, and the market still doesn't care.

I don't like how tied the market action is to movement in the dollar. It is really becoming quite extreme, and when we finally get a bounce in the dollar, stocks are likely to suffer a quick spike down. It is impossible to time when that might occur, so the best we can do is to be very aware of the correlation to the dollar and monitor it carefully.

This has been a particularly tough year for many, and it is very easy to feel like you are caught in a downward spiral. The best thing you can do is try to stay focused on the positive and give thanks for the good things you have, even it's just cranberry sauce in a can.....

Tuesday, November 24, 2009

A Dull Distribution Day...

It was an extremely dull day of trading. Since we were in the red and volume ticked up about 2% over yesterday's low levels, it qualifies as a "distribution day," a simple way some traders use to measure if bigger money is buying or selling. We have had quite a few distribution days in this market during its rallies, and they haven't mattered much, but when volume picks up on down days it doesn't inspire much confidence.

The problem the market had today was that the overanxious buying in the first half-hour of trading on Monday messed up the bullish setup that had developed last week when we churned for a few days and built a bit of a base. We used up at lot of our seasonal goodwill in that big gap up on Monday and now are struggling to gain further traction.

Tomorrow we will have very thin trading again, but it does have a history of being a positive day. We'll see if the traders can get some themes going, but they looked weary today and I'm not sure they are going to put forth the effort.....

I'm a bit taken back by Jim Cramer's (of; he writes that he can live with a trading tax, although not officially in favor of one....) view of a trader's tax. I think he is dead wrong on this. Such a tax will do nothing to create jobs and will destroy the industry of active trading. I'm not trying to be sensationalistic, but this tax could destroy the livelihood of many people. I plan on fighting this loudly and aggressively, and I hope many will join me....

CIEN Is A Buy Right Now

It's time to get aggressive on CIEN. This deal, where they will become an optical giant, was a great one for the company and will be very accretive for next year. Yes, they had to pay more than I would have liked. Yes, they had to issue a high-priced convertible to Nortel, which I also didn't like.

But Ciena was doing outstandingly well in a difficult environment where the major telco companies cut back. They can't afford to do so again in 2010, and my thinking is that Ciena now becomes a one-stop shop for optical needs.

Ciena will now be in the sweet spot to deliver equipment for high-def mobile and fast mobile Internet. The idea that somehow this deal is a setback for Ciena is ridiculous given the growth of the mobile internet.

It is always difficult to say, "This market is dead wrong about Ciena." The swift judgment determined that Gary Smith, the president and CEO of Ciena, simply goofed here, paid too much and hurt the company.

I think that judgment is wrong. This stock becomes the cheapest now of all the Mobile Internet Tsunami plays. It should be bought aggressively.....

long CIEN

Monday, November 23, 2009

It's Kinda Complicated; I Guess.....

It was quite a confusing day of action. Sentiment went from red hot at the open to moribund as the day progressed. Almost everything ended up well off intraday highs other than a few big-cap names like AAPL and AMZN. The weak dollar was the primary catalyst for the opening strength, but as it strengthened throughout the day, oil, gold and other commodity stocks pulled back sharply from their opening levels.

Overall, it was still a very positive day with plenty of green on the screens, but it was troubling how we lost momentum after the housing numbers and didn't really see the buyers give it another good go.

Technically, the S&P500, Russell 2000 and Nasdaq-100 all were turned back at or near significant overhead levels. The DJIA had a little better relative strength, but it was turned back as well.

It certainly wasn't a negative day, but the inability to gain any traction after the very hot open is of concern. The bulls used up a lot of energy, and it is going to be tougher to deliver that sort of action again, especially as volume slows down and folks figure that they might as well lock in the day's gains and go enjoy the holiday.

I think traders will be actively looking for some pockets of momentum in the next couple days, so there should be some interesting action to trade, but the screwy behavior today has complicated things a bit. We still have positives to work with, but the setup isn't as good as it was......

long AAPL

Friday, November 20, 2009

Follow The Hot Money?

The bad news this week was that we had a four-day streak of poor action. We held about even on Tuesday, but then sold off the rest of the week. The good news is that it is exactly the sort of consolidation we need. We were a bit overbought as the major indices attempted to make new highs and now, after backing and filling for a few days, there is a pretty good foundation for another run at the highs.

The selling this week wasn't particularly vigorous. We didn't hit any major air pockets and the dip buyers showed up late every day to do their thing. It was just some mild selling from some profit taking and movement of shares into stronger hands.

Much of the action continues to be highly correlated to any movement in the dollar, which is making for some very reactionary trading, but we uncoupled a few times for brief periods. There is no question but traders are keeping a very close eye on the currency markets these days, which makes for some potential surprises should the dollar suddenly strengthen, though there isn't much we can do about it other than be aware of the situation.

Next week, trading will be thin around the Thanksgiving holiday, but there is often a positive bias to the action. If that doesn't develop, it could be a very ugly bull trap, but there is nothing very worrisome about the technical condition of the major indices at this time.

The main thing I'll be watching for next week is pockets of "hot action." The thinner holiday flows often result in "hot-money" traders aggressively playing certain themes or sectors. With the bigger money on the sidelines, there could be some substantial moves if you are in the right things.

As always, I don't want to over-anticipate, but conditions look pretty good for some trading action and I'll be working on watch lists this weekend.....

Thursday, November 19, 2009

Backing and Filling - Setting Up For Some Gains By Thanksgiving?

For the third day in a row, we had a little last-minute buying that took us well off the lows of earlier in the day. Even with that bump, the action today was quite dreary. We were solidly in the red, and breadth was around 4 to 1 negative.

All major sectors except for gold miners were down on the day, with oil and commodity-related names looking the weakest. The dollar was up, which may be part of the problem, but we seem to have been less sensitive to the movement in the greenback in the last couple days.

In the bigger scheme of things, this is only the second day of any significant weakness out of last 14 trading days, and it wasn't a particularly aggressive selloff. Volume was about the same as yesterday, there were few signs of panic, and the vast majority of the selling occurred in the first 30 minutes of trading. I'd call it an "orderly selloff," but I'm not sure that the sanguine attitude is a way to produce a quick low.

Some backing and filling is a healthy thing. In fact, if we had a few more days of this sort of action, it would be a perfect setup for some good upside around the Thanksgiving holiday, which tends to a very positive time of the year. I'd prefer to see the dip-buying cool off for a little longer, but it is hard to keep those folks contained.

I see DELL on the wires after the close with a poor earnings report. That is pushing things back down a bit, but I suspect Dell may be dismissed by some as a company-specific problem rather than an industry issue.

In any event, it looks like we are going to have a bit of rest. Whether it is a pause that refreshes or the foreshadowing of something more dire, we will have to wait to see......

Wednesday, November 18, 2009

Market Drifts On A Day (Wednesday) That's Typically Down During Expiration Week...

We had another late-day flurry of buying, but overall it was a very lazy day of trading. We had a little red on the screens, but it was very minor and hardly deserves the description of "profit-taking." On the other hand, we didn't have much energy either, other than in the last few minutes of trading.

Agriculture stocks were a particularly bright spot, and early weakness in the dollar helped gold, but oil and commodity names disconnected from the dollar trade and were weak even though the dollar was down. Other than that, it was a very mixed day with some aimless drifting.

The indices have been close to flat for two days now, and that helps us to deal with the overbought conditions, but we still have plenty of charts that look extended. Also, that doubled-headed, head-and-shoulder formation on the IWM looks ominous. If small-caps start to underperform again, that will be worrisome. However, the senior indices have done nothing at all wrong and look quite healthy. We are sitting on the brink of new highs and churning a bit as we consolidate. It is hard to find fault with that, although this mediocre volume adds some confusion.

When the market has momentum, it is amazing how sticky we can be to the upside. Even when the perma-bulls are ready for a day of rest, we can't seem to manage one. We just have to make sure we respect that strength and don't over-anticipate a change in trend. The bulls are still firmly in control.....

Tuesday, November 17, 2009

What Do Buyers Do? They Buy...

The market looked quite sleepy most of the day, but the buyers woke up in the final hour of trading and delivered another solid close. The SPDR Trust is now up 11 of the last 12 days after starting the month in a very precarious technical position.

Volume was quite light today, but breadth was solid, and a rebound in the dollar didn't hurt oil and commodity-related stocks much at all. The weakest action came in retail after slightly disappointing earnings reports from TGT and HD.

Overall, we continue to have extremely positive action. It is obvious that there are a lot of underinvested bulls with bids under this market, and they are not letting things dip much at all. We are a bit technically extended, but we seem to be dealing with that with just a little slower action and some churning. One theme that we have seen often since March are these straight-up moves in the market without any meaningful basing or pullbacks. The bears just keep on getting squeezed, and the dip-buyers become even more aggressive.

If there are a lot of pessimists in the media who are trying to convince us that things are bad, they sure aren't doing a very good job of convincing anyone. This market is acting like it doesn't have a worry in the world....

Monday, November 16, 2009

Are We Still Listening To Meredith Whitney (See Earlier Post)?

Meredith Whitney made some bearish comments and took some steam out of the market in the final hour, but it was still a tremendously strong day, with around four-to-one positive breadth and new annual highs in the major indices. Volume was mediocre yet again, but it just doesn't seem to matter.

The only thing that matters in this market is that the dollar is sinking like a rock and there is a flood of cash looking for a better alternative than 0% interest rates.

We are riding a wave of momentum that has nothing to do with news or fundamentals. We have had a number of negative economic stats lately, such as Michigan sentiment and the revision to September retail sales, and they just haven't mattered.

This is a market driven by folks who are scrambling to find more long exposure and bears caught in a perpetual squeeze. Of course, analysis like that from Meredith Whitney is meaningless, because this market isn't interested in those arguments right now. She may actually be 100% correct about the problems, but the market just doesn't care, because people are too busy playing catch-up.

Sometimes it pays not to think too hard. This is one of those times.....

Why Do They Keep Putting Meredith Whitney On TV?

Meredith Whitney's an embarrassment. She comes on TV with no new information, with nothing other than some valuation calls, some "double-dip" rhetoric and a poorly reasoned rap on weak retail sales, and we listen. I am sure if you are a client of Whitney's you knew you had this one in the bag and the usual suspects -- GS, JPM and BAC -- got hammered. If I were a hedge-fund manager, I would have loved to have been "in shape" ahead of that interview.

I no longer think that Whitney does credible work. She has ignored anything that's happened, anything that's gotten better. She thinks the capital raises basically meant nothing. She talks about how Bank of America was cheap at $3, but not anymore. Was it expensive at $4, Ms. Whitney?

Is there any evidence WHATSOEVER that JP Morgan is weaker than at any time since the crisis began? Does anyone think that about Goldman Sachs? Does she not acknowledge that there is not only a normalized earnings model for so many banks out there, given the big fee increases, but that the notion of staying as negative as this seems almost foolish? No, make that foolish.

I think that you need to buy JP Morgan off this and I think you just got another chance to buy Goldman Sachs.

I think this is insane!


Intel's decision to boost the dividend is, in part, a sign, I believe, that it doesn't understand the market's reaction to the strength in the chip market and, in part, a statement that the AMD nonsense is now behind it. Very bullish. It also means it has plenty of money for capital equipment spending -- I hesitate to think how much they had reserved for AMD, which is why I think that while AMD had a nice pop, Intel should have had one, too. The stock, I believe, is now poised to go above where it was when it reported its great quarter.....

long INTC

Friday, November 13, 2009

Living In Interesting Times; And Why It's Not Paying To Be A Bear Right Now

Just pulling together some thoughts after an interesting week. Do you realize that global central banks and government agencies have thrown upwards of $30 trillion dollars at the crisis through direct lending and indirect backstops, with roughly 65% of that coming from stateside sources?

That's a big number any way you slice it and begs the natural question: is the needle pointing towards hyperinflation?

Not necessarily. If they were creating currency, that would be the most probable path by a long shot and I would be long any physical asset I could get my H1N1-free hands on. But since they're creating credit, it's a whole different analysis regarding how the economy, investors and other countries are likely to respond....

That "fits" with my view that we're sitting at a critical crossroads. The first path is the continued socialization of markets and bearded nationalization of troubled institutions. A lower dollar is a necessary precursor to—but no guarantor of—this dynamic and would continue to punish savers who preserved capital.

The other option is orderly destruction of debt, deflationary pressures and an eventual “outside in” recovery that paves to the way towards true globalization. The result would be a higher dollar and lower asset classes in the intermediate term but a sustainable foundation for economic expansion thereafter.

Deflation in a fractional reserve banking system means policy makers have, for all intents and purposes, lost control of the economy. It would also impact the top tier of our societal structure tied to the marketplace, which would be problematic for politicians and the constituencies that bankroll them. That, as much as anything else, is currently dictating policy......

As for today's market, after a one-day pullback, the buyers were back at work. Volume fell, but, for some reason that escapes me, this market seems to consistently rally on declining volume. Breadth, however, was quite strong and some of the stodgy big caps, like DIS, MSFT and MCD, performed quite well. Some of the big-cap technology stocks, like AAPL, AMZN and GOOG gained nicely, but volume on the moves was quite light. Once again, weakness in the dollar bolstered gold, oil, steel, coal and other commodity-related names, but financials were an obvious weak spot.

Under the surface, there was some choppy action and it looked like we might roll over as the day wound down, but the buyers stepped up in the final hour and pushed us up with some help from a dip in the dollar.

Technically, the major indices, with the exception of the small caps, have been churning for a few days right below key break-out levels. This is a pretty good-looking setup for a move higher. I'm still concerned about some of the weak small-cap action, but overall, the major indices are not an inviting short here.

This market has been much tougher to trade for many market players than the indices would seem to indicate. There is a lot of frustration out there and that is probably one of the reasons we continue to have such a strong market with some unusual technical characteristics.

It is easy to find reasons not to like this market, but a far bigger positive is that the price action is positive. Until the price action actually reflects some concern over the negatives, it won't pay to be bearish.....


Thursday, November 12, 2009

A Welcome Selloff?

It has been a while, but the bears finally managed a decent payday. Despite some seemingly good news from WMT, HPQ and INTC, the market focused instead on a strong dollar and a buildup in oil inventories. Those are the primary justifications for some profit-taking. Of course, the fact that the market has had another V-shaped move and is somewhat overbought is another reason to support the selling.

What is most worrisome about the market lately has been the action under the surface in small-caps and secondary names. The major indices have been boosted and still look pretty healthy, primarily because of bigger names like AMZN and GOOG. If you look deeper, you will see some major technical deterioration in many stocks.

After the run we have had, a one-day correction is something we should be happy to see. The market needs to consolidate and to shake out weak holders before it can attempt another leg up.

What we really have to watch for at this point is a situation where the dip-buyers jump back in but are then trapped in a quick reversal back down. The dip-buyers need to suffer some pain a few times before they will stop jumping in and supporting the market so quickly. They are a very tenacious group, and they have had little reason to fear the dip-buying approach so far.

Overall the S&P 500, DJIA and Nasdaq are still in good shape technically. They bounced too far, too fast in the past couple weeks, so they need to pull back and consolidate a bit. We can probably dip another 2%-3% or so without doing any real technical damage, but if we start to move back below the 50-day simple moving average, which is around 1060 on the S&P 500, then the picture changes quite a bit.....

Wednesday, November 11, 2009

Late Post - 2 To Consider and Some Veterans Day Thoughts...

Although the firm has not filed its 13HF yet for the quarter, there were two interesting filings yesterday from Baupost Group. The firm is managed by one of the more successful managers in the past two decades, so when Seth Klarman moves money around I pay attention. He purchased a stake in ENZN. The company recently announced that it is selling its specialty pharmaceutical business for an upfront payment of $300 million and royalties on the existing product line. The only remaining business will be their technology platform and the royalty stream. The company said it is evaluating options on how to return the value to shareholders....

Baupost also upped it s stake in satellite and wireless communication company ViaSat (VSAT). They now own over 14% of the company....

As for Veterans Day, this holiday was known originally as Armistice Day, as the cessation of hostilities on Nov. 11, 1918, was an armistice and not the end of World War I. It did not become Veterans Day in the U.S. until May 1954. Similarly, Memorial Day was originally a day of remembrance for Civil War casualties.

The appalling slaughter of World War I carried through past the signing of the armistice agreement at 5:10 a.m. (back-stamped to 5:00 a.m.) for a cease-fire at 11:00 a.m. Over the next six hours, more casualties were incurred in a war that had already been won than were to occur on D-Day on June 6, 1944. Some, including the American commander John J. Pershing, were opposed to letting the Germans off without a full defeat. Their opposition proved prophetic for what was to follow.

We often place life-and-death decisions for ourselves in the hands of others who, to put it as simply and bluntly as possible, don't give a damn about us as individuals. As Tim Melvin noted in reference to small banks, or as the ongoing kerfuffle about Goldman Sachs signals, we placed our economic and financial well-being in the hands of those who were insufficient to the task at hand and really did not care a whit for the taxpayer any more than Pershing, et al., cared for the cannon fodder of 1918.

We honor our veterans for their bravery and sacrifice, and should well do so. Our enduring human tragedy is that their presence was, is and shall always be necessary.....

I Think It's About Time To Short Some Gold...

In the contrarian of contrarian moves I'm thinking of building a gold short and do not anticipate needing to play with stops. As I felt with last years's oil bubble, I feel gold is fully emblazoned in one currently. And the move in gold this year could turn out to be like last year's move in oil, which many tried to argue was backed by the seemingly indisputable fundamentals but was more like a great work of fiction. The oil, and now gold, commodity fervor is more likely backed by structural issues related to ETF's and their weight in the front month contracts, lack of position limits in futures and the age ol' tradition of momentum begetting momentum and/or investors chasing...Moreover, the number of calls for gold to $2000, or $3000 or even $5000 has also reached a new level of intensity....

This would not be a timing trade per se and timing the turn on a bubble deflating is near impossible and I'm not doing that. I would simply be allocating a very small part of my gains this year to this new gold short, and as gains built, likely continue making the short position larger....

Given my macroeconomic stance, I do feel as though my timing on this potential trade may be pretty good. Time shall tell. If I'm wrong I'm wrong and it won't cost me much. However, if I'm correct and this fervor fades the move could be quite quick as well as sharp and the gains made on the double short could easily exceed 30% or greater....

position: thinking of shorting gold

Good Grief! No One Belives In This Market...

With continued help from a weak dollar, the bulls keep their winning streak going. After a gap up this morning, it looked like we were really going to catch some very strong momentum as we made a new high for the year in the S&P 500, but the dollar suddenly reversed up, and we end up drifting around for the rest of the day. It wasn't bad action at all, but once we cooled off, we couldn't regain the heat.

We had good breadth, with most major sectors except retail in the green. WMT was out with some comments today about how the holiday shopping season was likely to be tough once again, and M didn't help the sector either with some weak guidance. Gold, oil and the other weak-dollar plays prospered yet again.

The market continues to have very strong underlying bids, and the sellers just aren't getting any downside traction at all. We are a bit overbought and continue to have very mediocre volume, but the bears have no confidence.

The most notable characteristic of this market continues to be that no one seems to really believe in it. The buyers are there because they don't want to fight the trend, and the bears are just worn out from being constantly run over. It has been one of the most joyless and uncelebrated bull markets I have ever seen, but that seems to be one of the reasons it keeps on going....

Tuesday, November 10, 2009

The Pullback Didn't Come Today

After five positive days in a row that took the S&P 500 near its highs of the year, we had a very mixed day of action. Volume slowed a bit once again, and breadth was poor with about 2,200 advancers to 3,550 decliners, but some big-cap strength helped to hold the indices near the flat line.

The bullish argument here is that this is just some healthy consolidation after a big move and that we will set up for an assault at 1100 on the S&P 500. While we didn't continue the recent strong momentum, we didn't see much selling either.

The bearish argument at this point is a bit less compelling. We are seeing relatively poor action in small stocks, and the IWM is definitely looking vulnerable, but that doesn't mean that the big-caps won't keep on driving the major indices.

The strongest-acting stocks tend to be quite extended - maybe - on low volume, and there is very little that is consolidating for another leg up. If you want in, you have to be willing to chase bounces into resistance.

The major indices look much better than the average individual stock, and that is what makes this market quite tricky. The bulls are still in control, but this market isn't nearly as easy as it looks...

Friday, November 6, 2009

Late Post - Why The Concept Of Selling The Jobs Number Would Be Incorrect

My take is that we will see job gains by the end of the year - and possibly as early as this month. The Total Unemployment rate is peaking or peaked and those waiting to buy stocks when we have an unemployment rate back below 8% again will probably pay anywhere from 50-200% higher prices than today depending on the name they are buying.

Further, my extreme variant view of well above growth consensus all year has been correct but I was worried (5-6 months ago) that the economists may get emboldened and raise Q4 and Q1 numbers too much which might present stock risk at that time.

Well we are here in Q4 and pessimism is still extremely high with many more concerned about a double dip than a dynamic growth rip.

Bottom line, the negativity bubble is still the last bubble that needs to pop and until that happens forecasts for economic growth and stock returns will likely prove to be overly pessimistic.

Case in point, after CSCO's report and commentary I figured we would see an AAPL or GOOG type reaction for them. That has not happened and the fact you can buy CSCO (which has just picked up a star in Starnet (STAR)) for under $25 is remarkable. With a defunct Nortel (NT) a crippled Alacatel Lucent (ALU) and a Juniper (JNPR) that seems reluctant to buy Ciena (CIEN) or Riverbed (RVBD) or Adtran (ADTN) or ADC Telecommunications (ADCT) -- CSCO appears green lighted for a sustained advance and should regain some of its former lost luster. And yes I do think Juniper (JNPR) should be more acquisitive as it and CSCO are in semi-oligopolistic status at this point....


Did The Bears Waste A Good Opportunity, Or Are The Pins Still Set Up For Them?

Despite the drama over the rather poor jobs report this morning, it ended up being a very boring day of trading. The indices were up a minor amount, but breadth was negative and volume very light.

A number of bulls were encouraged by the action and argued that if the bears couldn't pressure the market more given the poor jobs data, particularly the 10.2% unemployment rate, then they obviously have little firepower. In view of how the market has had a tendency for many months to keep on going once it starts to bounce back up, it is difficult to dismiss the optimistic spin on the action.

The bears, on the other hand, argue that the market has bounced back five days in a row and is now running into overhead resistance. While the bulls did a nice job of holding things up today, there is formidable overhead resistance nearby, and the chances of another gravity-defying V-shaped move straight back up are declining.

If the bears are going to make a move, this is a very favorable setup for them right now. We have nothing much more than an oversold bounce back to resistance, and if we are going to stall out and roll over again, this is the point where it will happen. This is a market that hasn't respected those sorts of technical setups in a while, but that doesn't mean we should ignore them. We held up well today.

Next week should be a very interesting contest and should give us some good insight into how things will play out as the year winds down......

Thursday, November 5, 2009

Will It Last?

Back to writing again after going to Vegas and getting back into the swing of things....The market action today resembled what we saw so often so during the summer rally. Once we started running, there was no looking back. Volume was mediocre, but breadth very strong. The bears were worried about being squeezed, and the bulls were worried about being underinvested. Apparently, no one was too concerned about buying in front of the jobs data tomorrow, or maybe the shorts figured they better move out of the way.

The pattern of the market for a very long time now has been near breakdowns and then very aggressive recoveries. If you harbored any doubts about this market, you have been continuously surprised.

I think this action today is a celebration over the fact that the Fed is not doing anything to drain liquidity out of the system. Of course the knee-jerk selling that took place following the FOMC announcement on Wednesday was a good way to sucker in some bears before we took off again today.

Despite this very powerful move today, I still question whether we are going to pull off another V-shaped move straight back up. We have had some real changes in character lately, and while the market seems to have problems with short-term memory, I think the buyers may not be quite as euphoric going forward.

The bulls' biggest argument right now is that performance anxiety is going to drive a lot of money mangers to buy "beta" (stocks that move faster than the market averages) in hopes of catching up. I'm not sure that it is that simple.

We'll see what the jobs report brings in the morning. If we miss expectations, it will be very interesting to see if the buyers who missed out today are willing to buy a dip tomorrow. That has been the inclination since March. On the other hand, we have had a lot of "sell the good news" reactions lately, so keep that in mind if the numbers are better than expected.....