There was an impressive bounce after a very weak open and the market even managed to close strongly, though not quite at the highs. Late news from Apple (AAPL) about its plan to distribute some of its massive cash holdings helped hold the market up late in the day.
Despite the bounce, breadth was weak and plenty of stocks struggled. What was most impressive about the action, though, was the large number of stocks that hit new 12-month highs. About 350 stocks hit highs and only about 25 were at the lows. Many of the stocks hitting new highs are doing so with vigor, and the hot money is still eager to chase. It isn't all small-caps, either: American Express (AXP), Google (GOOG), Citigroup (C), FedEx (FDX) and Schwab (SCHW) are on the new highs list as well.
When you have that sort of momentum in individual stocks, the market has a greater tendency to stay sticky to the upside. As I've mentioned many times, markets and stocks at their highs don't suddenly reverse and go straight down. It takes time for a top to form and I am still hesitant to say a topping process has started.
When a market has this sort of underlying support, we can't be too bearish. If the number of new highs declines sharply accompanied by weak closes, I'll be very happy to take a bearish stance -- but it isn't happening yet. The bears are being teased with some negatives, but if they act too fast, they will get hurt. While there hasn't been much upside progress lately, there's even less downside progress. The bulls still have the edge, although the bears are trying harder lately.
Have a good evening. I'll see you tomorrow.