Nice Day For The Bulls

When I saw the high put/call ratios early this morning, I thought they might help the market rally during the day. That proved to be the case, as the big stock buyback from IBM helped ignite some buying interest.

The market also shook off the negative economic data, including home prices. In fact, the homebuilders index was the biggest gainer on the day, +3.55%. Retail and semis were the next winners on the day, while financials lagged.

MBIA had its AAA rating reaffirmed today, which also emboldened the bulls. This downgrade was one of the big fears in the market, and with this off the table I think bulls will feel its a bit safer to put more money to work.

Oil closed above $100 today, and the energy stocks were on fire again. It's really those companies with big natural gas exposure that are leading the way. This is one group where you could throw a dart at a board and likely hit a stock making a new 52-week high. I would look to add some exposure to this group on an inevitable pullback.

The Yen (FXY) moved higher today while the dollar was lower, but the market rallied anyway. Right now there are enough stocks and groups working related to the inflation trade (think: energy, commodities, agric, infrastructure) to carry the overall market higher. I still want to see the Yen move lower, but the longer it hovers in this territory, the more likely we see an upside breakout soon.

Last, the volatility index (VIX) moved solidly lower today, falling -4.91%. It is now very close to its 200-day support. The last time it hit its 200-day, it bounced much higher and coincided with an overall market selloff.

If it bounces higher again this time, I would expect another selloff. But if it can break below this 200-day support, that could unleash a bigger rally, which might extend itself into quarter-end. So it is possible to envision a bullish theme developing into that time frame.

I also covered what was left of my short ETF positions today, fyi.