Our recent optimistic positioning started to pay off today as Mr. Market rewarded faithful bulls with a solid move higher. Volume was decent and the sectors we like to see leading such as semiconductors and the general small cap arena fared well. Leadership was in oil today, which looked more like a dead cat bounce than a bullish move higher and despite the strength in metals we aren’t changing our thesis here that this is not signaling the end of the world.  We are still looking for money to rotate out of the old leaders and into some new names. We have the stirrings of that at hand but it is still quite early in the game.

Today’s action couldn’t have been scripted better with a methodical open, mid-day sell off, and a rally into the close. Participants will go home tonight chewing on the fact that this market is slowly putting in new yearly highs and may be leaving them behind. Furthermore, some decent reports from larger companies continue to display that the economy isn’t all that bad and pockets of strength still exist. Because of this psychology we wouldn’t be too quick to book gains into the strength as it could continue longer than one would imagine.

The S&P and Dow, technically look strong and the lagging Nasdaq may quickly right itself with another strong move from the Goog. (GOOG).  

We came into today on the long side and took the opportunity to add even more shares into strength. We suspect that fundamentally sound companies could continue to see bidders seeking to make up some lost performance. There really doesn’t seem to be a catalyst out there that would rocket us higher, but a wall of worry may be ahead. Either way, we’ll take it.

Have a good evening.