And thus the theme of this bull marches on. Selling is never met by additional selling and, of course, some day it will as a larger pullback that will be necessary and normal. However, we just can’t get any follow-through at this moment in time. There was so much promise for the bears. High beta stocks just getting slaughtered with the Nasdaq leading down, which is always a good sign for the bulls. It seemed like they would finally get some much needed love from the market but, of course, it was not meant to be as buyers stepped in once again and took the Nasdaq from deep losses to down just a point.

The S&P 500 closed right near its highs as did the Dow, both well in to the green, roughly 1/2 to almost 3/4 of a percent. What did happen today technically was the S&P 500 hit the 20-day exponential moving average at 1183. From there the strong usually rally, and the S&P 500 was no exception today, even with Goldman Sachs Group (GS) down five points early on in the trading day.

It’s normal to test those 20’s. The key is whether they hold or allow for a deeper test to the 50-day exponential moving averages. That may still come but with the way the markets closed today, it’s not coming in the immediate future. A 50-day test is just what this market badly needs. It would unwind those oscillators beautifully, but for now we’re just not able to get that type of consistent selling. The 20’s acted as the wall of support the bulls would hope for today. Now the bulls need to follow through themselves, although, the onus is clearly on the bears to get something done considered to be out of the ordinary.

Goldman got destroyed on Friday, yet the market barely went down. Only 1% on the averages thus you had to be very impressed with how the market handled things. GS was down big again today but made a massive reversal in front of their earnings report tomorrow morning before the opening bell. Not too many bears wanting to be in on it short in front of their earnings report as big numbers are likely. The fear of GS working again.

As GS bounced so did the market, but what’s key here is that GS held right at the bottom of its large triangle. No breach. No break. Of course, that could happen on their report tomorrow morning but it’s just as probable that the numbers will rocket things back up. Again, the bears just not able to follow through with lots of willing buyers at the bottom of the triangle. Bullish action for the moment. As long as GS holds up so will the market. After all, if GS wasn’t able to sell the market, you don’t want to bet against this market if GS is doing well.

Selling episodes are usually very sharp and swift within bull markets. This market could use a more prolonged period of selling to unwind things and allow the bullish percent to drop some. You don’t need big selling to unwind sentiment. People get bearish fast when markets stop going up, even if it’s a healthy bullish pause. Fear takes over fast ounce the music stops. Don’t ask why. Just get me out or sure, the market is done now. We just can’t seem to get going. That’s the mind set that takes over rather rapidly. A good few weeks pause would do wonders but who knows when this kicks in. For now, we cautiously participate in this ongoing bullish advance. For now, this was a very rapid, sharp sell off. Let’s see if the bears can pick things back up tomorrow. If not, they’ve likely lost all short-term momentum they gathered.

None of the daily charts are overbought now but it’s not like they’re oversold. Still much closer to overbought than anything else, but at least they’ve unwound some. Instead of RSI’s in the upper 70’s, they are now in the low- to-mid 60’s. Better. Not great. Better! This market doesn’t fall much from overbought before trying to move higher yet again. Every advance, however, will be less powerful in nature when dealing from near overbought. Only when we get really down there in RSI’s can we blast, but that doesn’t mean we can’t advance some from here. So many stocks are mature and full that it’ll take a lot of selling to allow for a stronger more sustained move higher yet again. We’ll try to take advantage of particular stocks when they pull back to appropriate levels of support. Nothing aggressive. Just pick them off here and there as they set up.

Peace,

Jack