The action today wasn't as euphoric as yesterday's, but there were still plenty of big moves, particularly in financials, oil, coal and China names. Breadth was positive, but the action was much stronger under the surface than was indicated by the indices. Even though the indices didn't reflect it, there was still plenty of positive seasonality to be found.
We looked a bit skittish at mid-afternoon, but we held the lows, and the dip-buyers got to push us up in the final hour of trading before a little end-of-day profit-taking. Seasonal strength begins to wane quickly now, but we have had some very strong momentum, and we'll have to see if that persists. Once it cools and profit-taking accelerates a bit, we should have some short-side trades, but I'm still waiting to see some poorer action before I'd press some bearish bets.
The biggest negative I see is the lack of any real bearishness, but the bulls have been complacent for quite a while now, and it hasn't mattered much. At some point they will get caught leaning the wrong way, but trying to anticipate it has been an impossible task so far. As the new-year excitement gradually cools off, the bears will have a much better chance of finally putting a few points on the board....
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