Market Shows Accumulation On Yesterday's Rally

The market had a nice rally yesterday, and volume rose on both exchanges, signaling accumulation. This is a good sign. Merrill's technical analyst noted that the accumulation since the 7/15 lows has been much better than the last 4 rally attempts, and as a result they think this rally could have "legs".

The market is a bit weak this morning, led down by financials. Freddie Mac (FRE) reported a loss and cut its dividend to $0.05 from $0.25. No surprise there. There was also a report that Morgan Stanley (MS) froze the home equity lines of thousands of customers. Doesn't sound good.

On a positive note, Cicso (CSCO) topped expectations and reiterated its long-term growth guidance. Also, Blackstone (BX) topped expectations nicely. Devon Energy (DVN) and Foster Wheeler (FWLT) also beat expectations, and all those stocks are higher.

Asian markets were up across the board overnight, following yesterday's big rally in the U.S. The dollar is also up again today. Oil and nat gas are positive, with oil back near $120. This is helping the energy and materials stocks lift. Freeport (FCX) is up nearly +10% after speculation that Vale (RIO) could be looking at it as a takeover.

The normal pattern after big Fed-day rallies has been for the market to give most of it back the next day. I would say if the S&P 500 can close with single-digit losses today it would be viewed as a constructive pullback. Yesterday it surged +35 points. The Nasdaq looks like it is getting close to testing its 50-day overhead resistance.

long DVN, FCX, FWLT