The main focus of the market today was Dr. Bernanke’s testimony before Congress. Some thought that he would try to establish his reputation as an inflation fighter and make some hawkish comments.  Instead his main point was that he needs more data before he can make decisions about future rate hikes.  Unfortunately that wasn’t enough to spark a buying frenzy but we did have some quiet, positive action.  We were impressed with the new Fed Head’s demeanor, clear explanations and his attitude towards evaluating all variables before making a decision regarding interest rates. As we mentioned, while this didn’t spark a big rally the reaction today was reassuring.

Overall we’re optimistic about today’s action as the S&P broke the recent downtrend on decent volume and now looks poised to challenge yearly highs. The Dow put in a new high for the year and the Nasdaq is slowly improving even with heavy weight Google (GOOG) still stuck in the mud.

Oil remained under pressure today and metals joined in the weakness. Leadership was in the Retailers and Transports again with select technology trailing not far behind.

Despite what we see as many positives, many market participants remain negative. The investor intelligence survey was released today showing bullish sentiment below the 50% mark which is a positive. When a lot of market participants are negatives that means there is a lot of idle cash on the sidelines from which a buying spree can emerge.

We increased our position sizes today in some of our select winners that look poised to move higher and started nibbling in others that have faded on light volume. All in all we feel good about this action and can’t shake the gut feeling that we may be close to a juncture where the bears throw in the towel as they fail to make progress to the downside. We aren’t throwing caution to the wind but are definitely starting to scrape our hooves and throw out a few snorts. The bears had an opportunity, now it may be time for the bovines to unwind. 

Have a good evening.