The indices didn't make a big move this week but managed to add about 0.5%. What was most impressive was the strength of the underlying support. The market closed near the highs on four of the five days and intraday weakness didn't last long.
A number of bears are arguing that this is a negative because it indicates that too many market players are overconfident and at high risk of being caught in a reversal. While there is obvious buying interest, I'm not seeing wild speculation or overly aggressive buying. It is mostly solid stock-picking, which is nice to see after the the market's behavior during the fiscal-cliff debate.
The stage is set for what should be an interesting earnings season. The bulls believe that expectations are too low and there will be "buy the bad news" support. The bears are looking for poor third-quarter numbers to continue and maybe even be worse due to the uncertainly that existed at the end of the year because of the fiscal cliff.
My feeling is that the market continues to act just fine and I am going to stick with it until it changes. If you want to talk yourself into taking a more bearish stance you can easily do that, but the nature of the market is to stay sticky to the upside longer than most people think it should.
Have a great weekend. I'll see you Monday from sunny Florida.
