Was Today's Action Meaningful?

Today was a remarkably strong day. I don't think anyone anticipated the strength of this rally, which had the feeling like there was a lot of short covering going on as well. Oil was up huge today, but the market rallied anyway, and tech and retail stayed strong even as oil spiked.

Also, S&P downgraded Ambac (ABK) and MBIA (MBI) late in the day, and for a brief time the financials rolled over. But they quickly regained their footing, and the market rallied into the close to end the day at session highs.

But to me the "tell" of today's action was the technical action in some of the major indexes, and what it could be foreshadowing for growth stocks. Take a look at the graphs above (click on them to enlarge graphic) and you will see some major breakouts. The S&P Mid-cap index broke out to a new high for the year, and this index is home to many growth stocks. The Russell 2000 small-cap is also back to even for the year. And the Nasdaq 100, an unadulterated growth index, is also now positive for the year.

I think this bodes very well for growth stocks in the second half. I am not saying its going to be a straight-up affair from here, there will certainly be selloffs along the way. But I think everyone who was firmly planted in the "retest" camp must be rethinking their stance.

We know that there is still more than $1 trillion in retail money market funds, and short interest on the NYSE hit a new record. That is a lot of fuel that can still come into this market and help power it to higher levels. Even financials could rally, although I think they will remain laggards on the year.