The momentum following Janet Yellen's dovish speech yesterday cooled off a bit, but it was still a solid day for the bulls. The indices had solid gains, breadth was solid at better than 2-to-1 positive and, most interesting of all, we had more than 400 new highs and less than 50 new lows. We haven't seen that sort of ratio of new highs to new lows in a very long time.
We did end up closing right around the same levels where we opened, but it is clear that there is still very solid underlying support. There are plenty of folks still looking to put cash to work even as the arguments about the irrationality of this action continue to heat up.
One of the most interesting things about the action lately is how we are seeing small-cap setups work. Stocks that I've mentioned lately such as Square (SQ), Centrus Energy (LEU), Alarm.com Holdings (ALRM), Integrated Electrical Services (IESC), Celator Pharmaceuticals (CPXX) and Orbcomm (ORBC) are acting very well. It is the sort of action that we see in solid bull markets, although this one sure causes some concern.
Once again I am going to point out that the key is the pricing action. There simply isn't any reason to try to out argue the momentum. The price action doesn't care about all those great bear arguments. Until that shifts, there is only one thing we need to know -- the trend is your friend.
Have a good evening. I'll see you tomorrow.