The sellers made a couple of tries today, but they were unable to generate any sustained pressure. The opening gap down and a midday dip were quickly bought and the indices closed near the highs of the day.
Despite overbought conditions the market is not yet willing to embrace a negative theme. While there are some good excuses for selling, they are being outweighed by a combination of "fear of missing out" and a short squeeze.
Fed Chair Powell continued to sound market friendly and non-voting member Evans talked about the Fed being patient for months before it hiked rates again. Much of the fourth quarter decline occurred because the market was worried that the Fed would be too hawkish for 2019. That is no longer a concern.
After eight straight down days ending on Dec. 24, the S&P 500 is now up five straight days and nine of the last 11. As I discussed this morning, the natural ebb and flow of the market has been replaced by computer algorithms that go from one extreme to the other. It was extremely difficult to predict when the market might bottom and now it is extremely difficult to predict when it might pull back and consolidate.
I believe it is highly unlikely that the indices will retest the December lows any time soon, but I do expect them to rest a bit into earnings season. With the Fed now viewed as dovish, stocks will have support even if there are more signs of economic weakness such as that exhibited by Apple (AAPL) .
Have a good evening. I'll see you tomorrow.