The market started today with a bang as participants seemed eager to put capital to work after the past few days of strength. As the day wore on, the euphoria ebbed and traders who had caught the early strength starting looking to book some profits. After a bit of profit taking we did manage another little flurry of buying into the close to take us well off the lows of the day.  

Breadth remained positive throughout, but faded late in the day.  Sector leadership remained good with areas we like to see leading, continuing to do their thing. Retailers in particularly were strong and showed that the consumer is not dead after all.

It is normal for a market that has popped to take a breather and consolidate gains. All major averages have been trading above their 50 day moving averages, with only the DJIA remaining below its 200 day. It would not surprise me to see the S&P pullback even lower, re-testing the 50 day moving average around the 1210 area. That would be perfectly normal consolidation and would bode well as long as key support is not breached.

We remain optimistic about this market and have been impressed with the recent move. It seems as if many individuals do not believe this advance and are reluctant to jump aboard. This uncertainty and disbelief is exactly what we need to take us higher, climbing a wall of worry.

We won’t be overly concerned should we base here or even trend lower for a day or two. We will watch technical indicators closely and as long as the charts do not flash warning signals, we will remain bullish on this market.

We did take the opportunity to pair back some winners today that have had big moves lately; however, this is simply just prudent money management and we will be actively seeking new areas to deploy capital as stocks we follow set up.

Enjoy the recent strength but remain prudent.