The upbeat holiday trading continues and is crushing the shorts who think that overbought conditions are meaningful in a thin and highly manipulated market. If there is one lesson you should have learned over the last few years, it is that V-shaped bounces have a tendency to go much higher than you think they might. Overbought tends to become even more overbought.
The action does seem a bit frothy, but the factory order news was better, and that was a good excuse for the buyers to stick around longer. I suspect the computers are operating their "too many folks are trying to call a top, so let's squeeze them" program as well.
Commodities are leading the charge today, with oil, gold and steel moving well. Banks are lagging a bit, but breadth is solid and volume is obviously light.
I continue to do well with some aggressive trading of small biotechs such as Nanosphere (NSPH), ImmunoCellular Therapeutics (IMUC) and Xenoport (XNPT). Stocks like Nationstar Mortgage Holdings (NSM) and VirnetX Holding (VHC) are really becoming extended, and I'm selling down the small positions I have left.
The bulls have the momentum, and the holiday is benefiting them. I understand the appeal of trying to short this move since we are extended, but we need to see some profit-taking kick in before I'd start to do anything aggressive on the short side. Right now, the big fear is of being left behind.