Performance Anxiety Starting To Set In

Color me surprised by the strength of today's breakout. The S&P has broken convincingly above the 950 level, and it testing 975 currently. There was a bevy of better than expected earnings reports today, but they have been coming in that way for more than a week now.

There was also some good news on the inventory of unsold homes data, as well as a nice drop in the continuing jobless claims figure. But I think the real driver of today's action is more about bearish funds covering their short positions as the market breaks out, and underinvested fund managers putting more money to work as performance anxiety sets in.

If you have never managed money professionally, let me tell you that performance anxiety is REAL, and it is very powerful. I have experienced it countless times, and there are plenty of folks that have been sitting on giant cash balances due to the uncertainty associated with this nascent recovery.

Stocks that are higher on good earnings report include MMM, BMY, EBAY, ISRG, and more. SNDK and QCOM gave conservative guidance, and those stocks are lower today. And UPS gave a disappointing forecast, but its stocks is higher - go figure.

Asian markets were higher overnight; the dollar is lower, helping oil and gold prices; the 10-year yield is higher to 3.67%; and the VIX is higher also to 23.80; Materials stocks (XLB) are leading the action, while consumer staples (XLP) are relative laggards.

Trading comment: I have take some partial profits on stocks that are up big today, like CELG and ISRG. I also took some partial profits on WMS even though it is breaking out to a new high today. The market is now heavily overbought, and I wouldn't be surprised to see it run out of gas soon. That said, I would look to put money back to work on any 3-5% pullback, or once the market has worked off its overbought condition. I still think too many folks are not positioned correctly for a continuing stair-step higher.

long CELG, ISRG, WMS